Correlation Between Punjab Sind and Newgen Software

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Can any of the company-specific risk be diversified away by investing in both Punjab Sind 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 Punjab Sind and Newgen Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Punjab Sind Bank and Newgen Software Technologies, you can compare the effects of market volatilities on Punjab Sind 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 Punjab Sind with a short position of Newgen Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Punjab Sind and Newgen Software.

Diversification Opportunities for Punjab Sind and Newgen Software

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Punjab and Newgen is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Punjab Sind Bank 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 Punjab Sind 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 Punjab Sind Bank 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 Punjab Sind i.e., Punjab Sind and Newgen Software go up and down completely randomly.

Pair Corralation between Punjab Sind and Newgen Software

Assuming the 90 days trading horizon Punjab Sind Bank is expected to generate 0.52 times more return on investment than Newgen Software. However, Punjab Sind Bank is 1.94 times less risky than Newgen Software. It trades about -0.08 of its potential returns per unit of risk. Newgen Software Technologies is currently generating about -0.04 per unit of risk. If you would invest  5,203  in Punjab Sind Bank on September 4, 2024 and sell it today you would lose (211.00) from holding Punjab Sind Bank or give up 4.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Punjab Sind Bank  vs.  Newgen Software Technologies

 Performance 
       Timeline  
Punjab Sind Bank 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
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.

Punjab Sind and Newgen Software Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Punjab Sind and Newgen Software

The main advantage of trading using opposite Punjab Sind and Newgen Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Punjab Sind 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.
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The idea behind Punjab Sind Bank 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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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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