Correlation Between Genertec Universal and Spirent Communications

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

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

Diversification Opportunities for Genertec Universal and Spirent Communications

0.31

Correlation Coefficient

Genertec Universal  Spirent Communications

Weak diversification

The 3 months correlation between Genertec and Spirent is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Genertec Universal Medical and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and Genertec 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 Genertec Universal Medical are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Genertec Universal i.e., Genertec Universal and Spirent Communications go up and down completely randomly.

Pair Corralation between Genertec Universal and Spirent Communications

Assuming the 90 days horizon Genertec Universal Medical is expected to generate 0.8 times more return on investment than Spirent Communications. However, Genertec Universal Medical is 1.26 times less risky than Spirent Communications. It trades about 0.22 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.09 per unit of risk. If you would invest  50.00  in Genertec Universal Medical on April 20, 2025 and sell it today you would earn a total of  15.00  from holding Genertec Universal Medical or generate 30.0% return on investment over 90 days.

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

Genertec Universal Medical  vs.  Spirent Communications plc

Genertec Universal

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Genertec Universal Medical are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Genertec Universal reported solid returns over the last few months and may actually be approaching a breakup point.

Spirent Communications

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spirent Communications plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Spirent Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genertec Universal and Spirent Communications

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

The idea behind Genertec Universal Medical and Spirent Communications 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..