Correlation Between Compass Group and Princess Private

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

Diversification Opportunities for Compass Group and Princess Private

-0.34

Correlation Coefficient

Compass Group  Princess Private

Very good diversification

The 3 months correlation between Compass and Princess is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and Princess Private Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princess Private Equity 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 Princess Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princess Private Equity has no effect on the direction of Compass Group i.e., Compass Group and Princess Private go up and down completely randomly.

Pair Corralation between Compass Group and Princess Private

Assuming the 90 days trading horizon Compass Group PLC is expected to generate 1.51 times more return on investment than Princess Private. However, Compass Group is 1.51 times more volatile than Princess Private Equity. It trades about 0.11 of its potential returns per unit of risk. Princess Private Equity is currently generating about 0.1 per unit of risk. If you would invest  244,255  in Compass Group PLC on April 25, 2025 and sell it today you would earn a total of  20,745  from holding Compass Group PLC or generate 8.49% 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.  Princess Private Equity

Compass Group PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Group PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Compass Group may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Princess Private Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Princess Private Equity are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Princess Private is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Compass Group and Princess Private

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

The idea behind Compass Group PLC and Princess Private Equity 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.