Correlation Between Internet Computer and ASML Holding

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Can any of the company-specific risk be diversified away by investing in both Internet Computer 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 Internet Computer and ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Internet Computer and ASML Holding NV, you can compare the effects of market volatilities on Internet Computer 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 Internet Computer with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Internet Computer and ASML Holding.

Diversification Opportunities for Internet Computer and ASML Holding

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Internet and ASML is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Internet Computer 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 Internet Computer 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 Internet Computer 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 Internet Computer i.e., Internet Computer and ASML Holding go up and down completely randomly.

Pair Corralation between Internet Computer and ASML Holding

Assuming the 90 days trading horizon Internet Computer is expected to generate 4.24 times more return on investment than ASML Holding. However, Internet Computer is 4.24 times more volatile than ASML Holding NV. It trades about 0.2 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.07 per unit of risk. If you would invest  1,260  in Internet Computer on December 30, 2023 and sell it today you would earn a total of  525.00  from holding Internet Computer or generate 41.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Internet Computer  vs.  ASML Holding NV

 Performance 
       Timeline  
Internet Computer 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Internet Computer are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Internet Computer exhibited solid returns over the last few months and may actually be approaching a breakup point.
ASML Holding NV 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite weak primary indicators, ASML Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Internet Computer and ASML Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Internet Computer and ASML Holding

The main advantage of trading using opposite Internet Computer and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Internet Computer 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 Internet Computer 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.
Check out your portfolio center.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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