Correlation Between Sasken Technologies and Newgen Software

Can any of the company-specific risk be diversified away by investing in both Sasken Technologies and Newgen Software 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 Sasken Technologies and Newgen Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sasken Technologies Limited and Newgen Software Technologies, you can compare the effects of market volatilities on Sasken Technologies and Newgen Software 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 Sasken Technologies with a short position of Newgen Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasken Technologies and Newgen Software.

Diversification Opportunities for Sasken Technologies and Newgen Software

-0.2

Correlation Coefficient

Sasken Technologies  Newgen Software

Good diversification

The 3 months correlation between Sasken and Newgen is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sasken Technologies Limited and Newgen Software Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newgen Software Tech and Sasken Technologies 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 Sasken Technologies Limited are associated (or correlated) with Newgen Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newgen Software Tech has no effect on the direction of Sasken Technologies i.e., Sasken Technologies and Newgen Software go up and down completely randomly.

Pair Corralation between Sasken Technologies and Newgen Software

Assuming the 90 days trading horizon Sasken Technologies Limited is expected to generate 0.83 times more return on investment than Newgen Software. However, Sasken Technologies Limited is 1.2 times less risky than Newgen Software. It trades about 0.19 of its potential returns per unit of risk. Newgen Software Technologies is currently generating about 0.13 per unit of risk. If you would invest  150,669  in Sasken Technologies Limited on September 12, 2024 and sell it today you would earn a total of  61,226  from holding Sasken Technologies Limited or generate 40.64% return on investment over 90 days.

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

Sasken Technologies Limited  vs.  Newgen Software Technologies

Sasken Technologies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sasken Technologies Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward-looking signals, Sasken Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Newgen Software Tech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newgen Software Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Newgen Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sasken Technologies and Newgen Software

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

The idea behind Sasken Technologies Limited and Newgen Software Technologies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.