Correlation Between ASM International and Lasertec

Can any of the company-specific risk be diversified away by investing in both ASM International and Lasertec 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 ASM International and Lasertec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASM International NV and Lasertec, you can compare the effects of market volatilities on ASM International and Lasertec 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 ASM International with a short position of Lasertec. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASM International and Lasertec.

Diversification Opportunities for ASM International and Lasertec

0.63

Correlation Coefficient

ASM International  Lasertec

Poor diversification

The 3 months correlation between ASM and Lasertec is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ASM International NV and Lasertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lasertec and ASM International 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 ASM International NV are associated (or correlated) with Lasertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lasertec has no effect on the direction of ASM International i.e., ASM International and Lasertec go up and down completely randomly.

Pair Corralation between ASM International and Lasertec

Assuming the 90 days horizon ASM International NV is expected to under-perform the Lasertec. In addition to that, ASM International is 2.37 times more volatile than Lasertec. It trades about -0.09 of its total potential returns per unit of risk. Lasertec is currently generating about -0.02 per unit of volatility. If you would invest  9,589  in Lasertec on December 28, 2024 and sell it today you would lose (238.00) from holding Lasertec or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

ASM International NV  vs.  Lasertec

ASM International

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASM International NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Lasertec

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ASM International and Lasertec

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

The idea behind ASM International NV and Lasertec 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.