Correlation Between Newgen Software and Intrasoft Technologies

Can any of the company-specific risk be diversified away by investing in both Newgen Software and Intrasoft 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 Intrasoft 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 Intrasoft Technologies Limited, you can compare the effects of market volatilities on Newgen Software and Intrasoft 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 Intrasoft Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newgen Software and Intrasoft Technologies.

Diversification Opportunities for Newgen Software and Intrasoft Technologies

0.37

Correlation Coefficient

Newgen Software  Intrasoft Technologies

Weak diversification

The 3 months correlation between Newgen and Intrasoft is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and Intrasoft Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrasoft 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 Intrasoft Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrasoft Technologies has no effect on the direction of Newgen Software i.e., Newgen Software and Intrasoft Technologies go up and down completely randomly.

Pair Corralation between Newgen Software and Intrasoft Technologies

Assuming the 90 days trading horizon Newgen Software Technologies is expected to generate 1.51 times more return on investment than Intrasoft Technologies. However, Newgen Software is 1.51 times more volatile than Intrasoft Technologies Limited. It trades about 0.02 of its potential returns per unit of risk. Intrasoft Technologies Limited is currently generating about -0.03 per unit of risk. If you would invest  122,595  in Newgen Software Technologies on October 25, 2024 and sell it today you would earn a total of  810.00  from holding Newgen Software Technologies or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Newgen Software Technologies  vs.  Intrasoft Technologies Limited

Newgen Software Tech

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newgen Software Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Newgen Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Intrasoft Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intrasoft Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Intrasoft Technologies is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Newgen Software and Intrasoft Technologies

The main advantage of trading using opposite Newgen Software and Intrasoft Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newgen Software position performs unexpectedly, Intrasoft 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 Intrasoft Technologies will offset losses from the drop in Intrasoft Technologies' long position.

The idea behind Newgen Software Technologies and Intrasoft 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.