Correlation Between Compass Group and Jardine Matheson

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

Diversification Opportunities for Compass Group and Jardine Matheson

0.0

Correlation Coefficient

Compass Group  Jardine Matheson

Pay attention - limited upside

The 3 months correlation between Compass and Jardine is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and Jardine Matheson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Matheson Holdings 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 Jardine Matheson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Matheson Holdings has no effect on the direction of Compass Group i.e., Compass Group and Jardine Matheson go up and down completely randomly.

Pair Corralation between Compass Group and Jardine Matheson

If you would invest  241,300  in Compass Group PLC on September 24, 2024 and sell it today you would earn a total of  23,500  from holding Compass Group PLC or generate 9.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Compass Group PLC  vs.  Jardine Matheson Holdings

Compass Group PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Group PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Compass Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jardine Matheson Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Compass Group and Jardine Matheson

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

The idea behind Compass Group PLC and Jardine Matheson Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.