Correlation Between ASML Holding and Koninklijke Philips
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Koninklijke Philips 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 Philips 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 Philips NV, you can compare the effects of market volatilities on ASML Holding and Koninklijke Philips 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 Philips. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Koninklijke Philips.
Diversification Opportunities for ASML Holding and Koninklijke Philips
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASML and Koninklijke is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Koninklijke Philips NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Philips 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 Philips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Philips has no effect on the direction of ASML Holding i.e., ASML Holding and Koninklijke Philips go up and down completely randomly.
Pair Corralation between ASML Holding and Koninklijke Philips
Assuming the 90 days trading horizon ASML Holding is expected to generate 18.64 times less return on investment than Koninklijke Philips. In addition to that, ASML Holding is 1.51 times more volatile than Koninklijke Philips NV. It trades about 0.01 of its total potential returns per unit of risk. Koninklijke Philips NV is currently generating about 0.16 per unit of volatility. If you would invest 2,451 in Koninklijke Philips NV on August 27, 2024 and sell it today you would earn a total of 136.00 from holding Koninklijke Philips NV or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. Koninklijke Philips NV
Performance |
| Timeline |
| ASML Holding NV |
| Koninklijke Philips |
ASML Holding and Koninklijke Philips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and Koninklijke Philips
The main advantage of trading using opposite ASML Holding and Koninklijke Philips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Koninklijke Philips 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 Philips will offset losses from the drop in Koninklijke Philips' 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 Philips vs. Unilever PLC | Koninklijke Philips vs. ING Groep NV | Koninklijke Philips vs. Aegon NV | Koninklijke Philips vs. Koninklijke Ahold Delhaize |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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