Correlation Between GURU ORGANIC and COMPASS GROUP

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

By analyzing existing cross correlation between GURU ORGANIC ENERGY and COMPASS GROUP, you can compare the effects of market volatilities on GURU ORGANIC and COMPASS GROUP 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 GURU ORGANIC with a short position of COMPASS GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GURU ORGANIC and COMPASS GROUP.

Diversification Opportunities for GURU ORGANIC and COMPASS GROUP

0.49

Correlation Coefficient

GURU ORGANIC  COMPASS GROUP

Very weak diversification

The 3 months correlation between GURU and COMPASS is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding GURU ORGANIC ENERGY and COMPASS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPASS GROUP and GURU ORGANIC 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 GURU ORGANIC ENERGY are associated (or correlated) with COMPASS GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPASS GROUP has no effect on the direction of GURU ORGANIC i.e., GURU ORGANIC and COMPASS GROUP go up and down completely randomly.

Pair Corralation between GURU ORGANIC and COMPASS GROUP

Assuming the 90 days horizon GURU ORGANIC ENERGY is expected to generate 2.9 times more return on investment than COMPASS GROUP. However, GURU ORGANIC is 2.9 times more volatile than COMPASS GROUP. It trades about 0.06 of its potential returns per unit of risk. COMPASS GROUP is currently generating about 0.07 per unit of risk. If you would invest  108.00  in GURU ORGANIC ENERGY on April 25, 2025 and sell it today you would earn a total of  10.00  from holding GURU ORGANIC ENERGY or generate 9.26% return on investment over 90 days.

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

GURU ORGANIC ENERGY  vs.  COMPASS GROUP

GURU ORGANIC ENERGY

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GURU ORGANIC ENERGY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GURU ORGANIC may actually be approaching a critical reversion point that can send shares even higher in August 2025.

COMPASS GROUP

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COMPASS GROUP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COMPASS GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GURU ORGANIC and COMPASS GROUP

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

The idea behind GURU ORGANIC ENERGY and COMPASS GROUP 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.