Correlation Between Cruzeiro and STERIS Plc

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

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

Diversification Opportunities for Cruzeiro and STERIS Plc

0.35

Correlation Coefficient

Cruzeiro  STERIS Plc

Weak diversification

The 3 months correlation between Cruzeiro and STERIS is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cruzeiro do Sul and STERIS plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STERIS plc and Cruzeiro 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 Cruzeiro do Sul 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 Cruzeiro i.e., Cruzeiro and STERIS Plc go up and down completely randomly.

Pair Corralation between Cruzeiro and STERIS Plc

Assuming the 90 days trading horizon Cruzeiro do Sul is expected to generate 6.03 times more return on investment than STERIS Plc. However, Cruzeiro is 6.03 times more volatile than STERIS plc. It trades about 0.2 of its potential returns per unit of risk. STERIS plc is currently generating about 0.13 per unit of risk. If you would invest  365.00  in Cruzeiro do Sul on April 21, 2025 and sell it today you would earn a total of  120.00  from holding Cruzeiro do Sul or generate 32.88% return on investment over 90 days.

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

Cruzeiro do Sul  vs.  STERIS plc

Cruzeiro do Sul

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cruzeiro do Sul are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cruzeiro unveiled solid returns over the last few months and may actually be approaching a breakup point.

STERIS plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STERIS plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, STERIS Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cruzeiro and STERIS Plc

The main advantage of trading using opposite Cruzeiro and STERIS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cruzeiro 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 Cruzeiro do Sul 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.