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 PK, 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

0.8

Correlation Coefficient

Mitie Group  Teleperformance

Very poor diversification

The 3 months correlation between Mitie and Teleperformance is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mitie Group Plc and Teleperformance PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleperformance PK 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 PK 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 Plc is expected to generate 1.34 times more return on investment than Teleperformance. However, Mitie Group is 1.34 times more volatile than Teleperformance PK. It trades about -0.04 of its potential returns per unit of risk. Teleperformance PK is currently generating about -0.11 per unit of risk. If you would invest  605.00  in Mitie Group Plc on October 25, 2024 and sell it today you would lose (45.00) from holding Mitie Group Plc or give up 7.44% of portfolio value over 90 days.

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

Mitie Group Plc  vs.  Teleperformance PK

Mitie Group Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitie Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. 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 PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleperformance PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 PK 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.