Correlation Between ASML Holding and Camtek

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

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

Diversification Opportunities for ASML Holding and Camtek

0.32

Correlation Coefficient

ASML Holding  Camtek

Weak diversification

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

Pair Corralation between ASML Holding and Camtek

Given the investment horizon of 90 days ASML Holding NV is expected to under-perform the Camtek. But the stock apears to be less risky and, when comparing its historical volatility, ASML Holding NV is 1.28 times less risky than Camtek. The stock trades about -0.06 of its potential returns per unit of risk. The Camtek is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  8,113  in Camtek on September 13, 2024 and sell it today you would lose (641.00) from holding Camtek or give up 7.9% of portfolio value over 90 days.

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

ASML Holding NV  vs.  Camtek

ASML Holding NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASML Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Camtek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camtek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Camtek is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ASML Holding and Camtek

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

The idea behind ASML Holding NV and Camtek 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.