Correlation Between Compass Group and Teleperformance

Can any of the company-specific risk be diversified away by investing in both Compass 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 Compass Group and Teleperformance 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 Teleperformance SE, you can compare the effects of market volatilities on Compass 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 Compass Group with a short position of Teleperformance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Teleperformance.

Diversification Opportunities for Compass Group and Teleperformance

0.53

Correlation Coefficient

Compass Group  Teleperformance

Very weak diversification

The 3 months correlation between Compass and Teleperformance is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Compass 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 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 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 Compass Group i.e., Compass Group and Teleperformance go up and down completely randomly.

Pair Corralation between Compass Group and Teleperformance

Assuming the 90 days trading horizon Compass Group PLC is expected to under-perform the Teleperformance. But the stock apears to be less risky and, when comparing its historical volatility, Compass Group PLC is 2.4 times less risky than Teleperformance. The stock trades about 0.0 of its potential returns per unit of risk. The Teleperformance SE is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8,507  in Teleperformance SE on April 20, 2025 and sell it today you would earn a total of  122.00  from holding Teleperformance SE or generate 1.43% return on investment over 90 days.

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

Compass Group PLC  vs.  Teleperformance SE

Compass Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compass Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Compass Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Teleperformance SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teleperformance SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Teleperformance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Compass Group and Teleperformance

The main advantage of trading using opposite Compass Group and Teleperformance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass 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 Compass 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.