Correlation Between Rajnandini Metal and Newgen Software

Can any of the company-specific risk be diversified away by investing in both Rajnandini Metal 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 Rajnandini Metal and Newgen Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rajnandini Metal Limited and Newgen Software Technologies, you can compare the effects of market volatilities on Rajnandini Metal 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 Rajnandini Metal with a short position of Newgen Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rajnandini Metal and Newgen Software.

Diversification Opportunities for Rajnandini Metal and Newgen Software

0.39

Correlation Coefficient

Rajnandini Metal  Newgen Software

Weak diversification

The 3 months correlation between Rajnandini and Newgen is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Rajnandini Metal Limited 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 Rajnandini Metal 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 Rajnandini Metal Limited 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 Rajnandini Metal i.e., Rajnandini Metal and Newgen Software go up and down completely randomly.

Pair Corralation between Rajnandini Metal and Newgen Software

Assuming the 90 days trading horizon Rajnandini Metal Limited is expected to under-perform the Newgen Software. But the stock apears to be less risky and, when comparing its historical volatility, Rajnandini Metal Limited is 1.32 times less risky than Newgen Software. The stock trades about -0.64 of its potential returns per unit of risk. The Newgen Software Technologies is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  122,120  in Newgen Software Technologies on April 4, 2025 and sell it today you would lose (8,030) from holding Newgen Software Technologies or give up 6.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Rajnandini Metal Limited  vs.  Newgen Software Technologies

Rajnandini Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rajnandini Metal Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Rajnandini Metal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Newgen Software Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newgen Software Technologies are ranked lower than 8 (%) 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.

Pair Trading with Rajnandini Metal and Newgen Software

The main advantage of trading using opposite Rajnandini Metal and Newgen Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rajnandini Metal 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.

The idea behind Rajnandini Metal Limited 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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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..