Correlation Between Newgen Software and Thirumalai Chemicals
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By analyzing existing cross correlation between Newgen Software Technologies and Thirumalai Chemicals Limited, you can compare the effects of market volatilities on Newgen Software and Thirumalai Chemicals 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 Thirumalai Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newgen Software and Thirumalai Chemicals.
Diversification Opportunities for Newgen Software and Thirumalai Chemicals
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newgen and Thirumalai is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and Thirumalai Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thirumalai Chemicals 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 Thirumalai Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thirumalai Chemicals has no effect on the direction of Newgen Software i.e., Newgen Software and Thirumalai Chemicals go up and down completely randomly.
Pair Corralation between Newgen Software and Thirumalai Chemicals
Assuming the 90 days trading horizon Newgen Software Technologies is expected to under-perform the Thirumalai Chemicals. In addition to that, Newgen Software is 1.95 times more volatile than Thirumalai Chemicals Limited. It trades about -0.21 of its total potential returns per unit of risk. Thirumalai Chemicals Limited is currently generating about -0.13 per unit of volatility. If you would invest 32,625 in Thirumalai Chemicals Limited on October 25, 2024 and sell it today you would lose (2,500) from holding Thirumalai Chemicals Limited or give up 7.66% 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. Thirumalai Chemicals Limited
Performance |
| Timeline |
| Newgen Software Tech |
| Thirumalai Chemicals |
Newgen Software and Thirumalai Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newgen Software and Thirumalai Chemicals
The main advantage of trading using opposite Newgen Software and Thirumalai Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newgen Software position performs unexpectedly, Thirumalai Chemicals 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 Thirumalai Chemicals will offset losses from the drop in Thirumalai Chemicals' long position.The idea behind Newgen Software Technologies and Thirumalai Chemicals 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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