Correlation Between ASML Holding and Take Two

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

Diversification Opportunities for ASML Holding and Take Two

-0.35

Correlation Coefficient

ASML Holding  Take Two

Very good diversification

The 3 months correlation between ASML and Take is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of ASML Holding i.e., ASML Holding and Take Two go up and down completely randomly.

Pair Corralation between ASML Holding and Take Two

Assuming the 90 days trading horizon ASML Holding NV is expected to under-perform the Take Two. But the stock apears to be less risky and, when comparing its historical volatility, ASML Holding NV is 1.11 times less risky than Take Two. The stock trades about -0.04 of its potential returns per unit of risk. The Take Two Interactive Software is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  28,196  in Take Two Interactive Software on December 22, 2024 and sell it today you would earn a total of  2,418  from holding Take Two Interactive Software or generate 8.58% 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.  Take Two Interactive Software

ASML Holding NV

Risk-Adjusted Performance

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 weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Take Two Interactive

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Take Two may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ASML Holding and Take Two

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

The idea behind ASML Holding NV and Take Two Interactive Software 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.