Correlation Between Science Applications and ASML HOLDING

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

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

Diversification Opportunities for Science Applications and ASML HOLDING

0.47

Correlation Coefficient

Science Applications  ASML HOLDING

Very weak diversification

The 3 months correlation between Science and ASML is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and ASML HOLDING NY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML HOLDING NY and Science Applications 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 Science Applications International 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 NY has no effect on the direction of Science Applications i.e., Science Applications and ASML HOLDING go up and down completely randomly.

Pair Corralation between Science Applications and ASML HOLDING

Assuming the 90 days trading horizon Science Applications International is expected to under-perform the ASML HOLDING. In addition to that, Science Applications is 1.11 times more volatile than ASML HOLDING NY. It trades about -0.04 of its total potential returns per unit of risk. ASML HOLDING NY is currently generating about 0.0 per unit of volatility. If you would invest  68,256  in ASML HOLDING NY on December 24, 2024 and sell it today you would lose (1,656) from holding ASML HOLDING NY or give up 2.43% of portfolio value over 90 days.

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

Science Applications Internati  vs.  ASML HOLDING NY

Science Applications

Risk-Adjusted Performance

Very Weak

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

ASML HOLDING NY

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Science Applications and ASML HOLDING

The main advantage of trading using opposite Science Applications and ASML HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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 Science Applications International and ASML HOLDING NY 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.