Correlation Between GameStop Corp and ASML Holding

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

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

Diversification Opportunities for GameStop Corp and ASML Holding

0.35

Correlation Coefficient

GameStop Corp  ASML Holding

Weak diversification

The 3 months correlation between GameStop and ASML is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp 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 GameStop Corp 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 GameStop Corp 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 GameStop Corp i.e., GameStop Corp and ASML Holding go up and down completely randomly.

Pair Corralation between GameStop Corp and ASML Holding

Assuming the 90 days trading horizon GameStop Corp is expected to under-perform the ASML Holding. In addition to that, GameStop Corp is 1.44 times more volatile than ASML Holding NV. It trades about -0.2 of its total potential returns per unit of risk. ASML Holding NV is currently generating about 0.19 per unit of volatility. If you would invest  69,200  in ASML Holding NV on October 22, 2024 and sell it today you would earn a total of  4,610  from holding ASML Holding NV or generate 6.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GameStop Corp  vs.  ASML Holding NV

GameStop Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GameStop Corp reported solid returns over the last few months and may actually be approaching a breakup point.

ASML Holding NV

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, ASML Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GameStop Corp and ASML Holding

The main advantage of trading using opposite GameStop Corp and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp 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 GameStop Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .