Correlation Between Newgen Software and Oriental Carbon

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

Diversification Opportunities for Newgen Software and Oriental Carbon

0.84

Correlation Coefficient

Newgen Software  Oriental Carbon

Very poor diversification

The 3 months correlation between Newgen and Oriental is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and Oriental Carbon Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Carbon Chemicals 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 Oriental Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Carbon Chemicals has no effect on the direction of Newgen Software i.e., Newgen Software and Oriental Carbon go up and down completely randomly.

Pair Corralation between Newgen Software and Oriental Carbon

Assuming the 90 days trading horizon Newgen Software Technologies is expected to under-perform the Oriental Carbon. In addition to that, Newgen Software is 1.62 times more volatile than Oriental Carbon Chemicals. It trades about -0.17 of its total potential returns per unit of risk. Oriental Carbon Chemicals is currently generating about -0.13 per unit of volatility. If you would invest  23,176  in Oriental Carbon Chemicals on December 25, 2024 and sell it today you would lose (4,591) from holding Oriental Carbon Chemicals or give up 19.81% of portfolio value over 90 days.

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

Newgen Software Technologies  vs.  Oriental Carbon Chemicals

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.

Oriental Carbon Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oriental Carbon Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Newgen Software and Oriental Carbon

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

The idea behind Newgen Software Technologies and Oriental Carbon Chemicals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.