Correlation Between ASML Holding and Fastned BV

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

Diversification Opportunities for ASML Holding and Fastned BV

0.53

Correlation Coefficient

ASML Holding  Fastned BV

Very weak diversification

The 3 months correlation between ASML and Fastned is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Fastned BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastned BV 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 Fastned BV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastned BV has no effect on the direction of ASML Holding i.e., ASML Holding and Fastned BV go up and down completely randomly.

Pair Corralation between ASML Holding and Fastned BV

Assuming the 90 days trading horizon ASML Holding NV is expected to generate 1.13 times more return on investment than Fastned BV. However, ASML Holding is 1.13 times more volatile than Fastned BV. It trades about -0.03 of its potential returns per unit of risk. Fastned BV is currently generating about -0.08 per unit of risk. If you would invest  67,045  in ASML Holding NV on December 30, 2024 and sell it today you would lose (4,485) from holding ASML Holding NV or give up 6.69% of portfolio value over 90 days.

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

ASML Holding NV  vs.  Fastned BV

ASML Holding NV

Risk-Adjusted Performance

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.

Fastned BV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fastned BV 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 Fastned BV

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

The idea behind ASML Holding NV and Fastned 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.