Correlation Between Newgen Software and Western India

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

Diversification Opportunities for Newgen Software and Western India

0.73

Correlation Coefficient

Newgen Software  Western India

Poor diversification

The 3 months correlation between Newgen and Western is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and The Western India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western India 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 Western India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western India has no effect on the direction of Newgen Software i.e., Newgen Software and Western India go up and down completely randomly.

Pair Corralation between Newgen Software and Western India

Assuming the 90 days trading horizon Newgen Software Technologies is expected to under-perform the Western India. In addition to that, Newgen Software is 1.9 times more volatile than The Western India. It trades about -0.14 of its total potential returns per unit of risk. The Western India is currently generating about -0.17 per unit of volatility. If you would invest  24,711  in The Western India on December 24, 2024 and sell it today you would lose (5,431) from holding The Western India or give up 21.98% 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.  The Western India

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 unsteady 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.

Western India

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Western India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Western India

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

The idea behind Newgen Software Technologies and The Western India 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.