Correlation Between Newgen Software and PTC India

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

Diversification Opportunities for Newgen Software and PTC India

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Newgen and PTC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and PTC India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC India Limited 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 PTC India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC India Limited has no effect on the direction of Newgen Software i.e., Newgen Software and PTC India go up and down completely randomly.

Pair Corralation between Newgen Software and PTC India

Assuming the 90 days trading horizon Newgen Software Technologies is expected to generate 1.6 times more return on investment than PTC India. However, Newgen Software is 1.6 times more volatile than PTC India Limited. It trades about 0.04 of its potential returns per unit of risk. PTC India Limited is currently generating about -0.09 per unit of risk. If you would invest  95,570  in Newgen Software Technologies on November 3, 2024 and sell it today you would earn a total of  9,245  from holding Newgen Software Technologies or generate 9.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Newgen Software Technologies  vs.  PTC India Limited

 Performance 
       Timeline  
Newgen Software Tech 

Risk-Adjusted Performance

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Weak
 
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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 weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
PTC India Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PTC India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Newgen Software and PTC India Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Newgen Software and PTC India

The main advantage of trading using opposite Newgen Software and PTC India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newgen Software position performs unexpectedly, PTC India 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 PTC India will offset losses from the drop in PTC India's long position.
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The idea behind Newgen Software Technologies and PTC India Limited 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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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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