Correlation Between ASML Holding and Koninklijke KPN
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Koninklijke KPN 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 Koninklijke KPN 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 Koninklijke KPN NV, you can compare the effects of market volatilities on ASML Holding and Koninklijke KPN 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 Koninklijke KPN. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Koninklijke KPN.
Diversification Opportunities for ASML Holding and Koninklijke KPN
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ASML and Koninklijke is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Koninklijke KPN NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke KPN NV 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 Koninklijke KPN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke KPN NV has no effect on the direction of ASML Holding i.e., ASML Holding and Koninklijke KPN go up and down completely randomly.
Pair Corralation between ASML Holding and Koninklijke KPN
Assuming the 90 days trading horizon ASML Holding NV is expected to generate 2.64 times more return on investment than Koninklijke KPN. However, ASML Holding is 2.64 times more volatile than Koninklijke KPN NV. It trades about 0.15 of its potential returns per unit of risk. Koninklijke KPN NV is currently generating about 0.05 per unit of risk. If you would invest 63,030 in ASML Holding NV on September 13, 2024 and sell it today you would earn a total of 4,800 from holding ASML Holding NV or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. Koninklijke KPN NV
Performance |
| Timeline |
| ASML Holding NV |
| Koninklijke KPN NV |
ASML Holding and Koninklijke KPN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and Koninklijke KPN
The main advantage of trading using opposite ASML Holding and Koninklijke KPN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Koninklijke KPN 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 Koninklijke KPN will offset losses from the drop in Koninklijke KPN's long position.| ASML Holding vs. Adyen NV | ASML Holding vs. Prosus NV | ASML Holding vs. Koninklijke Philips NV | ASML Holding vs. Koninklijke Ahold Delhaize |
| Koninklijke KPN vs. Aegon NV | Koninklijke KPN vs. Koninklijke Philips NV | Koninklijke KPN vs. Randstad NV | Koninklijke KPN vs. Akzo Nobel 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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