Correlation Between ASM Pacific and ASML Holding

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

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

Diversification Opportunities for ASM Pacific and ASML Holding

-0.08

Correlation Coefficient

ASM Pacific  ASML Holding

Good diversification

The 3 months correlation between ASM and ASML is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ASM Pacific Technology 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 ASM Pacific 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 Pacific Technology 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 ASM Pacific i.e., ASM Pacific and ASML Holding go up and down completely randomly.

Pair Corralation between ASM Pacific and ASML Holding

If you would invest  1,252  in ASM Pacific Technology on October 1, 2024 and sell it today you would earn a total of  0.00  from holding ASM Pacific Technology or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

ASM Pacific Technology  vs.  ASML Holding NV

ASM Pacific Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASM Pacific Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ASM Pacific is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with ASM Pacific and ASML Holding

The main advantage of trading using opposite ASM Pacific and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASM Pacific 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 ASM Pacific Technology 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 Stocks Directory module to find actively traded stocks across global markets.