Correlation Between ASML Holding and BANORT

Can any of the company-specific risk be diversified away by investing in both ASML Holding and BANORT 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 BANORT 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 BANORT 8 38, you can compare the effects of market volatilities on ASML Holding and BANORT 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 BANORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and BANORT.

Diversification Opportunities for ASML Holding and BANORT

-0.19

Correlation Coefficient

ASML Holding  BANORT

Good diversification

The 3 months correlation between ASML and BANORT is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and BANORT 8 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANORT 8 38 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 BANORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANORT 8 38 has no effect on the direction of ASML Holding i.e., ASML Holding and BANORT go up and down completely randomly.

Pair Corralation between ASML Holding and BANORT

Given the investment horizon of 90 days ASML Holding NV is expected to generate 1.58 times more return on investment than BANORT. However, ASML Holding is 1.58 times more volatile than BANORT 8 38. It trades about -0.01 of its potential returns per unit of risk. BANORT 8 38 is currently generating about -0.08 per unit of risk. If you would invest  96,369  in ASML Holding NV on June 2, 2024 and sell it today you would lose (5,982) from holding ASML Holding NV or give up 6.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.19%
Values	Daily Returns

ASML Holding NV  vs.  BANORT 8 38

ASML Holding NV

Risk-Adjusted Performance

0 of 100

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 quite persistent primary indicators, ASML Holding is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

BANORT 8 38

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANORT 8 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BANORT 8 38 investors.

Pair Trading with ASML Holding and BANORT

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

The idea behind ASML Holding NV and BANORT 8 38 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.