Correlation Between CVC Capital and ASML Holding

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

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

Diversification Opportunities for CVC Capital and ASML Holding

0.65

Correlation Coefficient

CVC Capital  ASML Holding

Poor diversification

The 3 months correlation between CVC and ASML is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CVC Capital Partners and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV and CVC Capital 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 CVC Capital Partners are associated (or correlated) with ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of CVC Capital i.e., CVC Capital and ASML Holding go up and down completely randomly.

Pair Corralation between CVC Capital and ASML Holding

Assuming the 90 days trading horizon CVC Capital Partners is expected to under-perform the ASML Holding. But the stock apears to be less risky and, when comparing its historical volatility, CVC Capital Partners is 1.16 times less risky than ASML Holding. The stock trades about -0.07 of its potential returns per unit of risk. The ASML Holding NV is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  68,342  in ASML Holding NV on December 26, 2024 and sell it today you would lose (872.00) from holding ASML Holding NV or give up 1.28% of portfolio value over 90 days.

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

CVC Capital Partners  vs.  ASML Holding NV

CVC Capital Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVC Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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. In spite of comparatively stable basic indicators, ASML Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CVC Capital and ASML Holding

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

The idea behind CVC Capital Partners and ASML Holding NV 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.