Correlation Between MicroStrategy Incorporated and ASML Holding

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

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

Diversification Opportunities for MicroStrategy Incorporated and ASML Holding

0.52

Correlation Coefficient

MicroStrategy Incorporated  ASML Holding

Very weak diversification

The 3 months correlation between MicroStrategy and ASML is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated 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 MicroStrategy Incorporated 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 MicroStrategy Incorporated 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 MicroStrategy Incorporated i.e., MicroStrategy Incorporated and ASML Holding go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and ASML Holding

Given the investment horizon of 90 days MicroStrategy Incorporated is expected to generate 2.47 times more return on investment than ASML Holding. However, MicroStrategy Incorporated is 2.47 times more volatile than ASML Holding NV. It trades about 0.02 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.0 per unit of risk. If you would invest  30,296  in MicroStrategy Incorporated on December 29, 2024 and sell it today you would lose (1,355) from holding MicroStrategy Incorporated or give up 4.47% of portfolio value over 90 days.

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

MicroStrategy Incorporated  vs.  ASML Holding NV

MicroStrategy Incorporated

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, MicroStrategy Incorporated may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 nearly stable essential indicators, ASML Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MicroStrategy Incorporated and ASML Holding

The main advantage of trading using opposite MicroStrategy Incorporated and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroStrategy Incorporated 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 MicroStrategy Incorporated 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.