Correlation Between Focus Universal and Spectris Plc

Can any of the company-specific risk be diversified away by investing in both Focus Universal and Spectris 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 Focus Universal and Spectris Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Focus Universal and Spectris plc, you can compare the effects of market volatilities on Focus Universal and Spectris 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 Focus Universal with a short position of Spectris Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Universal and Spectris Plc.

Diversification Opportunities for Focus Universal and Spectris Plc

0.13

Correlation Coefficient

Focus Universal  Spectris Plc

Average diversification

The 3 months correlation between Focus and Spectris is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Focus Universal and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc and Focus Universal 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 Focus Universal are associated (or correlated) with Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of Focus Universal i.e., Focus Universal and Spectris Plc go up and down completely randomly.

Pair Corralation between Focus Universal and Spectris Plc

Given the investment horizon of 90 days Focus Universal is expected to generate 7.51 times more return on investment than Spectris Plc. However, Focus Universal is 7.51 times more volatile than Spectris plc. It trades about 0.07 of its potential returns per unit of risk. Spectris plc is currently generating about 0.04 per unit of risk. If you would invest  485.00  in Focus Universal on December 29, 2024 and sell it today you would lose (5.00) from holding Focus Universal or give up 1.03% of portfolio value over 90 days.

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

Focus Universal  vs.  Spectris plc

Focus Universal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Universal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Focus Universal showed solid returns over the last few months and may actually be approaching a breakup point.

Spectris plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spectris plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward-looking indicators, Spectris Plc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Focus Universal and Spectris Plc

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

The idea behind Focus Universal and Spectris plc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.