Correlation Between Newgen Software and Taj GVK

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

Diversification Opportunities for Newgen Software and Taj GVK

0.74

Correlation Coefficient

Newgen Software  Taj GVK

Poor diversification

The 3 months correlation between Newgen and Taj is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and Taj GVK Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taj GVK Hotels 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 Taj GVK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taj GVK Hotels has no effect on the direction of Newgen Software i.e., Newgen Software and Taj GVK go up and down completely randomly.

Pair Corralation between Newgen Software and Taj GVK

Assuming the 90 days trading horizon Newgen Software Technologies is expected to generate 2.08 times more return on investment than Taj GVK. However, Newgen Software is 2.08 times more volatile than Taj GVK Hotels. It trades about 0.1 of its potential returns per unit of risk. Taj GVK Hotels is currently generating about 0.07 per unit of risk. If you would invest  20,219  in Newgen Software Technologies on October 11, 2024 and sell it today you would earn a total of  144,046  from holding Newgen Software Technologies or generate 712.43% return on investment over 90 days.

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

Newgen Software Technologies  vs.  Taj GVK Hotels

Newgen Software Tech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newgen Software Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Newgen Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Taj GVK Hotels

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Taj GVK Hotels are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Taj GVK sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newgen Software and Taj GVK

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

The idea behind Newgen Software Technologies and Taj GVK Hotels 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.