Correlation Between WiseTech Global and Temenos Group

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

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

Diversification Opportunities for WiseTech Global and Temenos Group

-0.04

Correlation Coefficient

WiseTech Global  Temenos Group

Good diversification

The 3 months correlation between WiseTech and Temenos is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global 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 WiseTech Global 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 WiseTech Global 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 WiseTech Global i.e., WiseTech Global and Temenos Group go up and down completely randomly.

Pair Corralation between WiseTech Global and Temenos Group

Assuming the 90 days horizon WiseTech Global Limited is expected to under-perform the Temenos Group. In addition to that, WiseTech Global is 1.53 times more volatile than Temenos Group AG. It trades about -0.24 of its total potential returns per unit of risk. Temenos Group AG is currently generating about 0.13 per unit of volatility. If you would invest  7,021  in Temenos Group AG on December 21, 2024 and sell it today you would earn a total of  994.00  from holding Temenos Group AG or generate 14.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

WiseTech Global Limited  vs.  Temenos Group AG

WiseTech Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days WiseTech Global Limited 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 indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Temenos Group AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Temenos Group AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Temenos Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WiseTech Global and Temenos Group

The main advantage of trading using opposite WiseTech Global and Temenos Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseTech Global 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 WiseTech Global 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.