Correlation Between ASML HOLDING and PPHE HOTEL

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

By analyzing existing cross correlation between ASML HOLDING NY and PPHE HOTEL GROUP, you can compare the effects of market volatilities on ASML HOLDING and PPHE HOTEL 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 PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML HOLDING and PPHE HOTEL.

Diversification Opportunities for ASML HOLDING and PPHE HOTEL

0.0

Correlation Coefficient

ASML HOLDING  PPHE HOTEL

Pay attention - limited upside

The 3 months correlation between ASML and PPHE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ASML HOLDING NY and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP 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 NY are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of ASML HOLDING i.e., ASML HOLDING and PPHE HOTEL go up and down completely randomly.

Pair Corralation between ASML HOLDING and PPHE HOTEL

Assuming the 90 days trading horizon ASML HOLDING is expected to generate 1.77 times less return on investment than PPHE HOTEL. But when comparing it to its historical volatility, ASML HOLDING NY is 1.13 times less risky than PPHE HOTEL. It trades about 0.18 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,410  in PPHE HOTEL GROUP on September 14, 2024 and sell it today you would earn a total of  180.00  from holding PPHE HOTEL GROUP or generate 12.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ASML HOLDING NY  vs.  PPHE HOTEL GROUP

ASML HOLDING NY

Risk-Adjusted Performance

0 of 100

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

PPHE HOTEL GROUP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PPHE HOTEL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ASML HOLDING and PPHE HOTEL

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

The idea behind ASML HOLDING NY and PPHE HOTEL GROUP 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.