Correlation Between ASML Holding and AIB Acquisition

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

Diversification Opportunities for ASML Holding and AIB Acquisition

-0.32

Correlation Coefficient

ASML Holding  AIB Acquisition

Very good diversification

The 3 months correlation between ASML and AIB is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and AIB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Acquisition Corp 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 AIB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Acquisition Corp has no effect on the direction of ASML Holding i.e., ASML Holding and AIB Acquisition go up and down completely randomly.

Pair Corralation between ASML Holding and AIB Acquisition

Given the investment horizon of 90 days ASML Holding NV is expected to generate 7.24 times more return on investment than AIB Acquisition. However, ASML Holding is 7.24 times more volatile than AIB Acquisition Corp. It trades about 0.03 of its potential returns per unit of risk. AIB Acquisition Corp is currently generating about 0.14 per unit of risk. If you would invest  63,736  in ASML Holding NV on October 11, 2024 and sell it today you would earn a total of  10,662  from holding ASML Holding NV or generate 16.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.66%
Values	Daily Returns

ASML Holding NV  vs.  AIB Acquisition Corp

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. Despite latest uncertain performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

AIB Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIB Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, AIB Acquisition 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 AIB Acquisition

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

The idea behind ASML Holding NV and AIB Acquisition Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.