Correlation Between ASM International and Alfen Beheer

Can any of the company-specific risk be diversified away by investing in both ASM International and Alfen Beheer 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 Alfen Beheer 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 Alfen Beheer BV, you can compare the effects of market volatilities on ASM International and Alfen Beheer 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 Alfen Beheer. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASM International and Alfen Beheer.

Diversification Opportunities for ASM International and Alfen Beheer

0.41

Correlation Coefficient

ASM International  Alfen Beheer

Very weak diversification

The 3 months correlation between ASM and Alfen is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ASM International NV and Alfen Beheer BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfen Beheer BV 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 Alfen Beheer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfen Beheer BV has no effect on the direction of ASM International i.e., ASM International and Alfen Beheer go up and down completely randomly.

Pair Corralation between ASM International and Alfen Beheer

Assuming the 90 days trading horizon ASM International NV is expected to generate 0.85 times more return on investment than Alfen Beheer. However, ASM International NV is 1.17 times less risky than Alfen Beheer. It trades about 0.32 of its potential returns per unit of risk. Alfen Beheer BV is currently generating about 0.01 per unit of risk. If you would invest  52,160  in ASM International NV on October 11, 2024 and sell it today you would earn a total of  7,240  from holding ASM International NV or generate 13.88% return on investment over 90 days.

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

ASM International NV  vs.  Alfen Beheer BV

ASM International

Risk-Adjusted Performance

2 of 100

Insignificant

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.

Alfen Beheer BV

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with ASM International and Alfen Beheer

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

The idea behind ASM International NV and Alfen Beheer BV 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..