Correlation Between ASML Holding and CVC Capital

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

Diversification Opportunities for ASML Holding and CVC Capital

-0.41

Correlation Coefficient

ASML Holding  CVC Capital

Very good diversification

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

Pair Corralation between ASML Holding and CVC Capital

Assuming the 90 days trading horizon ASML Holding NV is expected to generate 0.58 times more return on investment than CVC Capital. However, ASML Holding NV is 1.71 times less risky than CVC Capital. It trades about 0.31 of its potential returns per unit of risk. CVC Capital Partners is currently generating about 0.05 per unit of risk. If you would invest  62,960  in ASML Holding NV on September 17, 2024 and sell it today you would earn a total of  5,810  from holding ASML Holding NV or generate 9.23% return on investment over 90 days.

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

ASML Holding NV  vs.  CVC Capital Partners

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 comparatively stable basic indicators, ASML Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CVC Capital Partners

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVC Capital Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, CVC Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ASML Holding and CVC Capital

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

The idea behind ASML Holding NV and CVC Capital Partners 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.