Correlation Between ASML Holding and Logility Supply

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

Diversification Opportunities for ASML Holding and Logility Supply

-0.03

Correlation Coefficient

ASML Holding  Logility Supply

Good diversification

The 3 months correlation between ASML and Logility is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Logility Supply Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logility Supply Chain 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 Logility Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logility Supply Chain has no effect on the direction of ASML Holding i.e., ASML Holding and Logility Supply go up and down completely randomly.

Pair Corralation between ASML Holding and Logility Supply

Given the investment horizon of 90 days ASML Holding is expected to generate 6.55 times less return on investment than Logility Supply. But when comparing it to its historical volatility, ASML Holding NV is 1.32 times less risky than Logility Supply. It trades about 0.03 of its potential returns per unit of risk. Logility Supply Chain is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,060  in Logility Supply Chain on December 19, 2024 and sell it today you would earn a total of  363.00  from holding Logility Supply Chain or generate 34.25% return on investment over 90 days.

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

ASML Holding NV  vs.  Logility Supply Chain

ASML Holding NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, ASML Holding is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Logility Supply Chain

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Logility Supply Chain are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Logility Supply showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASML Holding and Logility Supply

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

The idea behind ASML Holding NV and Logility Supply Chain 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.