Correlation Between STERIS Plc and Ion Beam

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

By analyzing existing cross correlation between STERIS plc and Ion Beam Applications, you can compare the effects of market volatilities on STERIS Plc and Ion Beam 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 Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of STERIS Plc and Ion Beam.

Diversification Opportunities for STERIS Plc and Ion Beam

0.32

Correlation Coefficient

STERIS Plc  Ion Beam

Weak diversification

The 3 months correlation between STERIS and Ion is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding STERIS plc and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications 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 Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of STERIS Plc i.e., STERIS Plc and Ion Beam go up and down completely randomly.

Pair Corralation between STERIS Plc and Ion Beam

Considering the 90-day investment horizon STERIS Plc is expected to generate 13.66 times less return on investment than Ion Beam. But when comparing it to its historical volatility, STERIS plc is 1.53 times less risky than Ion Beam. It trades about 0.02 of its potential returns per unit of risk. Ion Beam Applications is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,115  in Ion Beam Applications on May 4, 2025 and sell it today you would earn a total of  324.00  from holding Ion Beam Applications or generate 29.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

STERIS plc  vs.  Ion Beam Applications

STERIS plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in STERIS plc are ranked lower than 1 (%) 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.

Ion Beam Applications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ion Beam Applications are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Ion Beam reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STERIS Plc and Ion Beam

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

The idea behind STERIS plc and Ion Beam Applications 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..