Correlation Between ASML HOLDING and Science Applications

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

Diversification Opportunities for ASML HOLDING and Science Applications

0.47

Correlation Coefficient

ASML HOLDING  Science Applications

Very weak diversification

The 3 months correlation between ASML and Science is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ASML HOLDING NY and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications 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 Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of ASML HOLDING i.e., ASML HOLDING and Science Applications go up and down completely randomly.

Pair Corralation between ASML HOLDING and Science Applications

Assuming the 90 days trading horizon ASML HOLDING NY is expected to generate 0.9 times more return on investment than Science Applications. However, ASML HOLDING NY is 1.11 times less risky than Science Applications. It trades about 0.0 of its potential returns per unit of risk. Science Applications International is currently generating about -0.04 per unit of risk. 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

ASML HOLDING NY  vs.  Science Applications Internati

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.

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.

Pair Trading with ASML HOLDING and Science Applications

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

The idea behind ASML HOLDING NY and Science Applications International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.