Correlation Between ASM International and PostNL NV

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

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

Diversification Opportunities for ASM International and PostNL NV

0.82

Correlation Coefficient

ASM International  PostNL NV

Very poor diversification

The 3 months correlation between ASM and PostNL is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ASM International NV and PostNL NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PostNL NV and ASM International 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 ASM International NV are associated (or correlated) with PostNL NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PostNL NV has no effect on the direction of ASM International i.e., ASM International and PostNL NV go up and down completely randomly.

Pair Corralation between ASM International and PostNL NV

Assuming the 90 days trading horizon ASM International NV is expected to generate 1.47 times more return on investment than PostNL NV. However, ASM International is 1.47 times more volatile than PostNL NV. It trades about 0.03 of its potential returns per unit of risk. PostNL NV is currently generating about -0.13 per unit of risk. If you would invest  56,180  in ASM International NV on September 20, 2024 and sell it today you would earn a total of  1,520  from holding ASM International NV or generate 2.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

ASM International NV  vs.  PostNL NV

ASM International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASM International NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, ASM International is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PostNL NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PostNL NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ASM International and PostNL NV

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

The idea behind ASM International NV and PostNL 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.