Correlation Between ASML Holding and Plum Acquisition

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

Diversification Opportunities for ASML Holding and Plum Acquisition

0.49

Correlation Coefficient

ASML Holding  Plum Acquisition

Very weak diversification

The 3 months correlation between ASML and Plum is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum 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 Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of ASML Holding i.e., ASML Holding and Plum Acquisition go up and down completely randomly.

Pair Corralation between ASML Holding and Plum Acquisition

Given the investment horizon of 90 days ASML Holding NV is expected to generate 0.66 times more return on investment than Plum Acquisition. However, ASML Holding NV is 1.51 times less risky than Plum Acquisition. It trades about 0.17 of its potential returns per unit of risk. Plum Acquisition Corp is currently generating about 0.05 per unit of risk. If you would invest  68,447  in ASML Holding NV on October 26, 2024 and sell it today you would earn a total of  8,224  from holding ASML Holding NV or generate 12.02% return on investment over 90 days.

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

ASML Holding NV  vs.  Plum Acquisition Corp

ASML Holding NV

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain primary indicators, ASML Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Plum Acquisition Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Plum Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking indicators, Plum 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 Plum Acquisition

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

The idea behind ASML Holding NV and Plum 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.