Correlation Between ASM International and Hydratec Industries
Can any of the company-specific risk be diversified away by investing in both ASM International and Hydratec Industries 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 ASM International and Hydratec Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASM International NV and Hydratec Industries NV, you can compare the effects of market volatilities on ASM International and Hydratec Industries 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 ASM International with a short position of Hydratec Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASM International and Hydratec Industries.
Diversification Opportunities for ASM International and Hydratec Industries
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ASM and Hydratec is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ASM International NV and Hydratec Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydratec Industries and ASM International 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 ASM International NV are associated (or correlated) with Hydratec Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydratec Industries has no effect on the direction of ASM International i.e., ASM International and Hydratec Industries go up and down completely randomly.
Pair Corralation between ASM International and Hydratec Industries
Assuming the 90 days trading horizon ASM International NV is expected to generate 2.88 times more return on investment than Hydratec Industries. However, ASM International is 2.88 times more volatile than Hydratec Industries NV. It trades about 0.03 of its potential returns per unit of risk. Hydratec Industries NV is currently generating about 0.05 per unit of risk. If you would invest 51,640 in ASM International NV on September 12, 2024 and sell it today you would earn a total of 520.00 from holding ASM International NV or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASM International NV vs. Hydratec Industries NV
Performance |
| Timeline |
| ASM International |
| Hydratec Industries |
ASM International and Hydratec Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASM International and Hydratec Industries
The main advantage of trading using opposite ASM International and Hydratec Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASM International position performs unexpectedly, Hydratec Industries 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 Hydratec Industries will offset losses from the drop in Hydratec Industries' long position.| ASM International vs. BE Semiconductor Industries | ASM International vs. ASML Holding NV | ASM International vs. NN Group NV | ASM International vs. Aalberts Industries NV |
| Hydratec Industries vs. Holland Colours NV | Hydratec Industries vs. NV Nederlandsche Apparatenfabriek | Hydratec Industries vs. Amsterdam Commodities NV | Hydratec Industries vs. TKH Group NV |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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