Correlation Between Temenos Group and Ams AG

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

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

Diversification Opportunities for Temenos Group and Ams AG

-0.4

Correlation Coefficient

Temenos Group  Ams AG

Very good diversification

The 3 months correlation between Temenos and Ams is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Temenos Group AG and Ams AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ams AG and Temenos Group 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 Temenos Group AG are associated (or correlated) with Ams AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ams AG has no effect on the direction of Temenos Group i.e., Temenos Group and Ams AG go up and down completely randomly.

Pair Corralation between Temenos Group and Ams AG

Assuming the 90 days trading horizon Temenos Group AG is expected to under-perform the Ams AG. But the stock apears to be less risky and, when comparing its historical volatility, Temenos Group AG is 2.31 times less risky than Ams AG. The stock trades about -0.01 of its potential returns per unit of risk. The Ams AG is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  606.00  in Ams AG on April 21, 2025 and sell it today you would earn a total of  618.00  from holding Ams AG or generate 101.98% return on investment over 90 days.

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

Temenos Group AG  vs.  Ams AG

Temenos Group AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Temenos Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Temenos Group is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ams AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ams AG are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Ams AG showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Temenos Group and Ams AG

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

The idea behind Temenos Group AG and Ams 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.