Correlation Between ASML Holding and Photronics
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Photronics 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 Photronics 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 Photronics, you can compare the effects of market volatilities on ASML Holding and Photronics 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 Photronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Photronics.
Diversification Opportunities for ASML Holding and Photronics
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ASML and Photronics is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Photronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photronics 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 Photronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photronics has no effect on the direction of ASML Holding i.e., ASML Holding and Photronics go up and down completely randomly.
Pair Corralation between ASML Holding and Photronics
Given the investment horizon of 90 days ASML Holding NV is expected to under-perform the Photronics. But the stock apears to be less risky and, when comparing its historical volatility, ASML Holding NV is 1.24 times less risky than Photronics. The stock trades about -0.07 of its potential returns per unit of risk. The Photronics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,392 in Photronics on August 27, 2024 and sell it today you would earn a total of 151.00 from holding Photronics or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. Photronics
Performance |
| Timeline |
| ASML Holding NV |
| Photronics |
ASML Holding and Photronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and Photronics
The main advantage of trading using opposite ASML Holding and Photronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Photronics 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 Photronics will offset losses from the drop in Photronics' long position.| ASML Holding vs. Applied Materials | ASML Holding vs. KLA Tencor | ASML Holding vs. Axcelis Technologies | ASML Holding vs. Teradyne |
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 Stocks Directory module to find actively traded stocks across global markets.
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