Correlation Between Compass Group and One Group

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

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

Diversification Opportunities for Compass Group and One Group

-0.33

Correlation Coefficient

Compass Group  One Group

Very good diversification

The 3 months correlation between Compass and One is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and One Group Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Group Hospitality and Compass 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 Compass Group PLC are associated (or correlated) with One Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Group Hospitality has no effect on the direction of Compass Group i.e., Compass Group and One Group go up and down completely randomly.

Pair Corralation between Compass Group and One Group

Assuming the 90 days horizon Compass Group PLC is expected to generate 0.27 times more return on investment than One Group. However, Compass Group PLC is 3.72 times less risky than One Group. It trades about 0.08 of its potential returns per unit of risk. One Group Hospitality is currently generating about -0.07 per unit of risk. If you would invest  3,204  in Compass Group PLC on October 6, 2024 and sell it today you would earn a total of  156.00  from holding Compass Group PLC or generate 4.87% return on investment over 90 days.

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

Compass Group PLC  vs.  One Group Hospitality

Compass Group PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Group PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Compass Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

One Group Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One Group Hospitality 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 forward-looking signals remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Compass Group and One Group

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

The idea behind Compass Group PLC and One Group Hospitality 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.