Correlation Between ASML Holding and Zoom Video

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

Diversification Opportunities for ASML Holding and Zoom Video

-0.07

Correlation Coefficient

ASML Holding  Zoom Video

Good diversification

The 3 months correlation between ASML and Zoom is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications 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 Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of ASML Holding i.e., ASML Holding and Zoom Video go up and down completely randomly.

Pair Corralation between ASML Holding and Zoom Video

Assuming the 90 days trading horizon ASML Holding NV is expected to generate 1.07 times more return on investment than Zoom Video. However, ASML Holding is 1.07 times more volatile than Zoom Video Communications. It trades about 0.04 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.04 per unit of risk. If you would invest  6,037  in ASML Holding NV on October 11, 2024 and sell it today you would earn a total of  2,164  from holding ASML Holding NV or generate 35.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

ASML Holding NV  vs.  Zoom Video Communications

ASML Holding NV

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days ASML Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, ASML Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zoom Video Communications

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zoom Video sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASML Holding and Zoom Video

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

The idea behind ASML Holding NV and Zoom Video Communications 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 Stocks Directory module to find actively traded stocks across global markets.