Correlation Between STERIS Plc and EDAP TMS

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

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

Diversification Opportunities for STERIS Plc and EDAP TMS

0.56

Correlation Coefficient

STERIS Plc  EDAP TMS

Very weak diversification

The 3 months correlation between STERIS and EDAP is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding STERIS plc and EDAP TMS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDAP TMS SA and STERIS 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 STERIS plc are associated (or correlated) with EDAP TMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDAP TMS SA has no effect on the direction of STERIS Plc i.e., STERIS Plc and EDAP TMS go up and down completely randomly.

Pair Corralation between STERIS Plc and EDAP TMS

Considering the 90-day investment horizon STERIS Plc is expected to generate 10.62 times less return on investment than EDAP TMS. But when comparing it to its historical volatility, STERIS plc is 4.19 times less risky than EDAP TMS. It trades about 0.05 of its potential returns per unit of risk. EDAP TMS SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  157.00  in EDAP TMS SA on July 5, 2025 and sell it today you would earn a total of  76.00  from holding EDAP TMS SA or generate 48.41% return on investment over 90 days.

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

STERIS plc  vs.  EDAP TMS SA

STERIS plc

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in STERIS plc are ranked lower than 4 (%) 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.

EDAP TMS SA

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in EDAP TMS SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EDAP TMS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STERIS Plc and EDAP TMS

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

The idea behind STERIS plc and EDAP TMS SA 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.