Correlation Between Zota Health and Newgen Software

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

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

Diversification Opportunities for Zota Health and Newgen Software

0.81

Correlation Coefficient

Zota Health  Newgen Software

Very poor diversification

The 3 months correlation between Zota and Newgen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Zota Health Care 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 Zota Health 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 Zota Health Care 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 Zota Health i.e., Zota Health and Newgen Software go up and down completely randomly.

Pair Corralation between Zota Health and Newgen Software

Assuming the 90 days trading horizon Zota Health Care is expected to generate 0.8 times more return on investment than Newgen Software. However, Zota Health Care is 1.25 times less risky than Newgen Software. It trades about 0.25 of its potential returns per unit of risk. Newgen Software Technologies is currently generating about 0.02 per unit of risk. If you would invest  58,425  in Zota Health Care on October 25, 2024 and sell it today you would earn a total of  38,230  from holding Zota Health Care or generate 65.43% return on investment over 90 days.

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

Zota Health Care  vs.  Newgen Software Technologies

Zota Health Care

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zota Health Care are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Zota Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Newgen Software Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newgen Software Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Newgen Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zota Health and Newgen Software

The main advantage of trading using opposite Zota Health and Newgen Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zota Health 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 Zota Health Care 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.