Correlation Between ASML Holding and Ctac NV

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

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

Diversification Opportunities for ASML Holding and Ctac NV

0.68

Correlation Coefficient

ASML Holding  Ctac NV

Poor diversification

The 3 months correlation between ASML and Ctac is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Ctac NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ctac NV 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 NV are associated (or correlated) with Ctac NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ctac NV has no effect on the direction of ASML Holding i.e., ASML Holding and Ctac NV go up and down completely randomly.

Pair Corralation between ASML Holding and Ctac NV

Assuming the 90 days trading horizon ASML Holding NV is expected to under-perform the Ctac NV. In addition to that, ASML Holding is 1.5 times more volatile than Ctac NV. It trades about -0.11 of its total potential returns per unit of risk. Ctac NV is currently generating about -0.06 per unit of volatility. If you would invest  300.00  in Ctac NV on August 30, 2024 and sell it today you would lose (28.00) from holding Ctac NV or give up 9.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

ASML Holding NV  vs.  Ctac NV

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ctac NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ctac NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ASML Holding and Ctac NV

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

The idea behind ASML Holding NV and Ctac 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.