Correlation Between Newgen Software and Total Transport

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

Diversification Opportunities for Newgen Software and Total Transport

0.23

Correlation Coefficient

Newgen Software  Total Transport

Modest diversification

The 3 months correlation between Newgen and Total is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and Total Transport Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Transport Systems 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 Total Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Transport Systems has no effect on the direction of Newgen Software i.e., Newgen Software and Total Transport go up and down completely randomly.

Pair Corralation between Newgen Software and Total Transport

Assuming the 90 days trading horizon Newgen Software Technologies is expected to under-perform the Total Transport. In addition to that, Newgen Software is 1.03 times more volatile than Total Transport Systems. It trades about -0.18 of its total potential returns per unit of risk. Total Transport Systems is currently generating about 0.01 per unit of volatility. If you would invest  7,673  in Total Transport Systems on December 26, 2024 and sell it today you would lose (231.00) from holding Total Transport Systems or give up 3.01% of portfolio value over 90 days.

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

Newgen Software Technologies  vs.  Total Transport Systems

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.

Total Transport Systems

Risk-Adjusted Performance

Weak

Over the last 90 days Total Transport Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Total Transport is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Newgen Software and Total Transport

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

The idea behind Newgen Software Technologies and Total Transport Systems 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.