Correlation Between Newgen Software and TECIL Chemicals

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

Diversification Opportunities for Newgen Software and TECIL Chemicals

0.67

Correlation Coefficient

Newgen Software  TECIL Chemicals

Poor diversification

The 3 months correlation between Newgen and TECIL is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and TECIL Chemicals and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TECIL 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 TECIL Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TECIL Chemicals has no effect on the direction of Newgen Software i.e., Newgen Software and TECIL Chemicals go up and down completely randomly.

Pair Corralation between Newgen Software and TECIL Chemicals

Assuming the 90 days trading horizon Newgen Software Technologies is expected to under-perform the TECIL Chemicals. In addition to that, Newgen Software is 1.12 times more volatile than TECIL Chemicals and. It trades about -0.18 of its total potential returns per unit of risk. TECIL Chemicals and is currently generating about -0.07 per unit of volatility. If you would invest  2,578  in TECIL Chemicals and on December 30, 2024 and sell it today you would lose (475.00) from holding TECIL Chemicals and or give up 18.43% 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.  TECIL Chemicals and

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 abnormal 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.

TECIL Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days TECIL Chemicals and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Newgen Software and TECIL Chemicals

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

The idea behind Newgen Software Technologies and TECIL Chemicals and 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.