Correlation Between ASML Holding and Spectra7 Microsystems

Can any of the company-specific risk be diversified away by investing in both ASML Holding and Spectra7 Microsystems 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 Spectra7 Microsystems 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 Spectra7 Microsystems, you can compare the effects of market volatilities on ASML Holding and Spectra7 Microsystems 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 Spectra7 Microsystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Spectra7 Microsystems.

Diversification Opportunities for ASML Holding and Spectra7 Microsystems

0.1

Correlation Coefficient

ASML Holding  Spectra7 Microsystems

Average diversification

The 3 months correlation between ASML and Spectra7 is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Spectra7 Microsystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectra7 Microsystems 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 Spectra7 Microsystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectra7 Microsystems has no effect on the direction of ASML Holding i.e., ASML Holding and Spectra7 Microsystems go up and down completely randomly.

Pair Corralation between ASML Holding and Spectra7 Microsystems

Given the investment horizon of 90 days ASML Holding NV is expected to generate 0.19 times more return on investment than Spectra7 Microsystems. However, ASML Holding NV is 5.28 times less risky than Spectra7 Microsystems. It trades about 0.03 of its potential returns per unit of risk. Spectra7 Microsystems is currently generating about -0.13 per unit of risk. If you would invest  71,950  in ASML Holding NV on December 21, 2024 and sell it today you would earn a total of  1,456  from holding ASML Holding NV or generate 2.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

ASML Holding NV  vs.  Spectra7 Microsystems

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.

Spectra7 Microsystems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spectra7 Microsystems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ASML Holding and Spectra7 Microsystems

The main advantage of trading using opposite ASML Holding and Spectra7 Microsystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Spectra7 Microsystems 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 Spectra7 Microsystems will offset losses from the drop in Spectra7 Microsystems' long position.

The idea behind ASML Holding NV and Spectra7 Microsystems 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.