Correlation Between STERIS Plc and United American

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

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

Diversification Opportunities for STERIS Plc and United American

-0.51

Correlation Coefficient

STERIS Plc  United American

Excellent diversification

The 3 months correlation between STERIS and United is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding STERIS plc and United American Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United American Heal 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 United American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United American Heal has no effect on the direction of STERIS Plc i.e., STERIS Plc and United American go up and down completely randomly.

Pair Corralation between STERIS Plc and United American

If you would invest  2.10  in United American Healthcare on September 13, 2024 and sell it today you would earn a total of  0.00  from holding United American Healthcare or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

STERIS plc  vs.  United American Healthcare

STERIS plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STERIS plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

United American Heal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United American Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, United American is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with STERIS Plc and United American

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

The idea behind STERIS plc and United American Healthcare 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 Transaction History module to view history of all your transactions and understand their impact on performance.