Correlation Between Altium and Temenos Group

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

By analyzing existing cross correlation between Altium Limited and Temenos Group AG, you can compare the effects of market volatilities on Altium and Temenos Group 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 Altium with a short position of Temenos Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altium and Temenos Group.

Diversification Opportunities for Altium and Temenos Group

0.07

Correlation Coefficient

Altium  Temenos Group

Significant diversification

The 3 months correlation between Altium and Temenos is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Altium Limited and Temenos Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Temenos Group AG and Altium 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 Altium Limited are associated (or correlated) with Temenos Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Temenos Group AG has no effect on the direction of Altium i.e., Altium and Temenos Group go up and down completely randomly.

Pair Corralation between Altium and Temenos Group

Assuming the 90 days horizon Altium Limited is expected to generate 1.22 times more return on investment than Temenos Group. However, Altium is 1.22 times more volatile than Temenos Group AG. It trades about 0.1 of its potential returns per unit of risk. Temenos Group AG is currently generating about 0.03 per unit of risk. If you would invest  2,405  in Altium Limited on October 11, 2024 and sell it today you would earn a total of  2,395  from holding Altium Limited or generate 99.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	54.14%
Values	Daily Returns

Altium Limited  vs.  Temenos Group AG

Altium Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altium Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Altium is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Temenos Group AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Temenos Group AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Temenos Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Altium and Temenos Group

The main advantage of trading using opposite Altium and Temenos Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altium position performs unexpectedly, Temenos Group 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 Temenos Group will offset losses from the drop in Temenos Group's long position.

The idea behind Altium Limited and Temenos Group AG 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.