Correlation Between Mitie Group and Teleperformance

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

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

Diversification Opportunities for Mitie Group and Teleperformance

0.55

Correlation Coefficient

Mitie Group  Teleperformance

Very weak diversification

The 3 months correlation between Mitie and Teleperformance is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mitie Group Plc and Teleperformance SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleperformance SE and Mitie 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 Mitie Group Plc are associated (or correlated) with Teleperformance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleperformance SE has no effect on the direction of Mitie Group i.e., Mitie Group and Teleperformance go up and down completely randomly.

Pair Corralation between Mitie Group and Teleperformance

Assuming the 90 days horizon Mitie Group is expected to generate 2.03 times less return on investment than Teleperformance. But when comparing it to its historical volatility, Mitie Group Plc is 1.23 times less risky than Teleperformance. It trades about 0.04 of its potential returns per unit of risk. Teleperformance SE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,000  in Teleperformance SE on December 2, 2024 and sell it today you would earn a total of  777.00  from holding Teleperformance SE or generate 8.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.89%
Values	Daily Returns

Mitie Group Plc  vs.  Teleperformance SE

Mitie Group Plc

Risk-Adjusted Performance

Insignificant

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

Teleperformance SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teleperformance SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Teleperformance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mitie Group and Teleperformance

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

The idea behind Mitie Group Plc and Teleperformance SE 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.