Correlation Between Spectris Plc and Focus Universal

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

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

Diversification Opportunities for Spectris Plc and Focus Universal

0.13

Correlation Coefficient

Spectris Plc  Focus Universal

Average diversification

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

Pair Corralation between Spectris Plc and Focus Universal

Assuming the 90 days horizon Spectris Plc is expected to generate 14.95 times less return on investment than Focus Universal. But when comparing it to its historical volatility, Spectris plc is 7.51 times less risky than Focus Universal. It trades about 0.04 of its potential returns per unit of risk. Focus Universal is currently generating about 0.07 of returns per unit of risk over similar time horizon. 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

Spectris plc  vs.  Focus Universal

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.

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.

Pair Trading with Spectris Plc and Focus Universal

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

The idea behind Spectris plc and Focus Universal 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.