Correlation Between A1MT34 and ASML Holding

Can any of the company-specific risk be diversified away by investing in both A1MT34 and ASML Holding 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 A1MT34 and ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A1MT34 and ASML Holding NV, you can compare the effects of market volatilities on A1MT34 and ASML Holding 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 A1MT34 with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of A1MT34 and ASML Holding.

Diversification Opportunities for A1MT34 and ASML Holding

0.49

Correlation Coefficient

A1MT34  ASML Holding

Very weak diversification

The 3 months correlation between A1MT34 and ASML is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding A1MT34 and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV and A1MT34 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 A1MT34 are associated (or correlated) with ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of A1MT34 i.e., A1MT34 and ASML Holding go up and down completely randomly.

Pair Corralation between A1MT34 and ASML Holding

Assuming the 90 days trading horizon A1MT34 is expected to generate 4.34 times less return on investment than ASML Holding. In addition to that, A1MT34 is 1.26 times more volatile than ASML Holding NV. It trades about 0.05 of its total potential returns per unit of risk. ASML Holding NV is currently generating about 0.27 per unit of volatility. If you would invest  7,224  in ASML Holding NV on September 25, 2024 and sell it today you would earn a total of  900.00  from holding ASML Holding NV or generate 12.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

A1MT34  vs.  ASML Holding NV

A1MT34

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A1MT34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, A1MT34 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ASML Holding NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, ASML Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with A1MT34 and ASML Holding

The main advantage of trading using opposite A1MT34 and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A1MT34 position performs unexpectedly, ASML Holding 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 ASML Holding will offset losses from the drop in ASML Holding's long position.

The idea behind A1MT34 and ASML Holding NV 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.