Correlation Between Newgen Software and Easy Trip

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

Diversification Opportunities for Newgen Software and Easy Trip

-0.14

Correlation Coefficient

Newgen Software  Easy Trip

Good diversification

The 3 months correlation between Newgen and Easy is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and Easy Trip Planners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easy Trip Planners 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 Easy Trip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easy Trip Planners has no effect on the direction of Newgen Software i.e., Newgen Software and Easy Trip go up and down completely randomly.

Pair Corralation between Newgen Software and Easy Trip

Assuming the 90 days trading horizon Newgen Software is expected to generate 49.42 times less return on investment than Easy Trip. But when comparing it to its historical volatility, Newgen Software Technologies is 35.17 times less risky than Easy Trip. It trades about 0.08 of its potential returns per unit of risk. Easy Trip Planners is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,944  in Easy Trip Planners on September 4, 2024 and sell it today you would lose (217.00) from holding Easy Trip Planners or give up 11.16% of portfolio value over 90 days.

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

Newgen Software Technologies  vs.  Easy Trip Planners

Newgen Software Tech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Newgen Software Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Newgen Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Easy Trip Planners

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Easy Trip Planners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Easy Trip unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newgen Software and Easy Trip

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

The idea behind Newgen Software Technologies and Easy Trip Planners 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.