Correlation Between ASML Holding and Space-Communication

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

Diversification Opportunities for ASML Holding and Space-Communication

0.0

Correlation Coefficient

ASML Holding  Space-Communication

Pay attention - limited upside

The 3 months correlation between ASML and Space-Communication is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Space Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Space Communication 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 Space-Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Space Communication has no effect on the direction of ASML Holding i.e., ASML Holding and Space-Communication go up and down completely randomly.

Pair Corralation between ASML Holding and Space-Communication

If you would invest  71,586  in ASML Holding NV on October 26, 2024 and sell it today you would earn a total of  2,110  from holding ASML Holding NV or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

ASML Holding NV  vs.  Space Communication

ASML Holding NV

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 3 (%) 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.

Space Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Space Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Space-Communication is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ASML Holding and Space-Communication

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

The idea behind ASML Holding NV and Space Communication 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.