Correlation Between Newgen Software and Orissa Minerals

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

Diversification Opportunities for Newgen Software and Orissa Minerals

0.2
  Correlation Coefficient

Modest diversification

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

Pair Corralation between Newgen Software and Orissa Minerals

Assuming the 90 days trading horizon Newgen Software Technologies is expected to generate 1.73 times more return on investment than Orissa Minerals. However, Newgen Software is 1.73 times more volatile than The Orissa Minerals. It trades about 0.07 of its potential returns per unit of risk. The Orissa Minerals is currently generating about -0.17 per unit of risk. If you would invest  132,305  in Newgen Software Technologies on September 20, 2024 and sell it today you would earn a total of  17,540  from holding Newgen Software Technologies or generate 13.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Newgen Software Technologies  vs.  The Orissa Minerals

 Performance 
       Timeline  
Newgen Software Tech 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Newgen Software Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Newgen Software sustained solid returns over the last few months and may actually be approaching a breakup point.
Orissa Minerals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The Orissa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Newgen Software and Orissa Minerals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Newgen Software and Orissa Minerals

The main advantage of trading using opposite Newgen Software and Orissa Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newgen Software position performs unexpectedly, Orissa Minerals 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 Orissa Minerals will offset losses from the drop in Orissa Minerals' long position.
The idea behind Newgen Software Technologies and The Orissa Minerals 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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