Correlation Between SIS and Newgen Software

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

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

Diversification Opportunities for SIS and Newgen Software

0.76

Correlation Coefficient

SIS  Newgen Software

Poor diversification

The 3 months correlation between SIS and Newgen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SIS 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 SIS 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 SIS 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 SIS i.e., SIS and Newgen Software go up and down completely randomly.

Pair Corralation between SIS and Newgen Software

Assuming the 90 days trading horizon SIS LIMITED is expected to generate 0.64 times more return on investment than Newgen Software. However, SIS LIMITED is 1.56 times less risky than Newgen Software. It trades about -0.05 of its potential returns per unit of risk. Newgen Software Technologies is currently generating about -0.18 per unit of risk. If you would invest  36,090  in SIS LIMITED on December 31, 2024 and sell it today you would lose (3,600) from holding SIS LIMITED or give up 9.98% of portfolio value over 90 days.

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

SIS LIMITED  vs.  Newgen Software Technologies

SIS LIMITED

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIS LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SIS and Newgen Software

The main advantage of trading using opposite SIS and Newgen Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIS 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 SIS 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.