Correlation Between Compass Group and Assura PLC
Can any of the company-specific risk be diversified away by investing in both Compass Group and Assura PLC 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 Assura PLC 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 Assura PLC, you can compare the effects of market volatilities on Compass Group and Assura PLC 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 Assura PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Assura PLC.
Diversification Opportunities for Compass Group and Assura PLC
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compass and Assura is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and Assura PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assura PLC 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 Assura PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assura PLC has no effect on the direction of Compass Group i.e., Compass Group and Assura PLC go up and down completely randomly.
Pair Corralation between Compass Group and Assura PLC
Assuming the 90 days trading horizon Compass Group PLC is expected to generate 0.6 times more return on investment than Assura PLC. However, Compass Group PLC is 1.66 times less risky than Assura PLC. It trades about 0.39 of its potential returns per unit of risk. Assura PLC is currently generating about -0.05 per unit of risk. If you would invest 251,500 in Compass Group PLC on September 1, 2024 and sell it today you would earn a total of 17,600 from holding Compass Group PLC or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Compass Group PLC vs. Assura PLC
Performance |
| Timeline |
| Compass Group PLC |
| Assura PLC |
Compass Group and Assura PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and Assura PLC
The main advantage of trading using opposite Compass Group and Assura PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group position performs unexpectedly, Assura PLC 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 Assura PLC will offset losses from the drop in Assura PLC's long position.| Compass Group vs. G5 Entertainment AB | Compass Group vs. XLMedia PLC | Compass Group vs. Centaur Media | Compass Group vs. Flutter Entertainment PLC |
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Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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