Correlation Between Orthofix Medical and STERIS Plc

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

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

Diversification Opportunities for Orthofix Medical and STERIS Plc

-0.24

Correlation Coefficient

Orthofix Medical  STERIS Plc

Very good diversification

The 3 months correlation between Orthofix and STERIS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Orthofix Medical and STERIS plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STERIS plc and Orthofix Medical 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 Orthofix Medical are associated (or correlated) with STERIS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STERIS plc has no effect on the direction of Orthofix Medical i.e., Orthofix Medical and STERIS Plc go up and down completely randomly.

Pair Corralation between Orthofix Medical and STERIS Plc

Given the investment horizon of 90 days Orthofix Medical is expected to under-perform the STERIS Plc. In addition to that, Orthofix Medical is 1.75 times more volatile than STERIS plc. It trades about -0.09 of its total potential returns per unit of risk. STERIS plc is currently generating about 0.04 per unit of volatility. If you would invest  22,172  in STERIS plc on May 1, 2025 and sell it today you would earn a total of  665.00  from holding STERIS plc or generate 3.0% return on investment over 90 days.

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

Orthofix Medical  vs.  STERIS plc

Orthofix Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orthofix Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

STERIS plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STERIS plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, STERIS Plc is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Orthofix Medical and STERIS Plc

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

The idea behind Orthofix Medical and STERIS 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.