Correlation Between Newgen Software and Goldstone Technologies

Can any of the company-specific risk be diversified away by investing in both Newgen Software and Goldstone Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Newgen Software and Goldstone Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Newgen Software Technologies and Goldstone Technologies Limited, you can compare the effects of market volatilities on Newgen Software and Goldstone Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Newgen Software with a short position of Goldstone Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newgen Software and Goldstone Technologies.

Diversification Opportunities for Newgen Software and Goldstone Technologies

0.73

Correlation Coefficient

Newgen Software  Goldstone Technologies

Poor diversification

The 3 months correlation between Newgen and Goldstone is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and Goldstone Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldstone Technologies and Newgen Software is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Newgen Software Technologies are associated (or correlated) with Goldstone Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldstone Technologies has no effect on the direction of Newgen Software i.e., Newgen Software and Goldstone Technologies go up and down completely randomly.

Pair Corralation between Newgen Software and Goldstone Technologies

Assuming the 90 days trading horizon Newgen Software Technologies is expected to under-perform the Goldstone Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Newgen Software Technologies is 1.33 times less risky than Goldstone Technologies. The stock trades about -0.18 of its potential returns per unit of risk. The Goldstone Technologies Limited is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  8,210  in Goldstone Technologies Limited on December 26, 2024 and sell it today you would lose (1,993) from holding Goldstone Technologies Limited or give up 24.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Newgen Software Technologies  vs.  Goldstone Technologies Limited

Newgen Software Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newgen Software Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Goldstone Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldstone Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Newgen Software and Goldstone Technologies

The main advantage of trading using opposite Newgen Software and Goldstone Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newgen Software position performs unexpectedly, Goldstone Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Goldstone Technologies will offset losses from the drop in Goldstone Technologies' long position.

The idea behind Newgen Software Technologies and Goldstone Technologies Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.