Correlation Between ASML Holding and APPLE

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Can any of the company-specific risk be diversified away by investing in both ASML Holding and APPLE 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 APPLE 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 APPLE INC 275, you can compare the effects of market volatilities on ASML Holding and APPLE 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 APPLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and APPLE.

Diversification Opportunities for ASML Holding and APPLE

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between ASML and APPLE is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and APPLE INC 275 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE INC 275 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 APPLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLE INC 275 has no effect on the direction of ASML Holding i.e., ASML Holding and APPLE go up and down completely randomly.

Pair Corralation between ASML Holding and APPLE

Given the investment horizon of 90 days ASML Holding NV is expected to generate 9.34 times more return on investment than APPLE. However, ASML Holding is 9.34 times more volatile than APPLE INC 275. It trades about 0.02 of its potential returns per unit of risk. APPLE INC 275 is currently generating about 0.02 per unit of risk. If you would invest  65,834  in ASML Holding NV on November 2, 2024 and sell it today you would earn a total of  8,844  from holding ASML Holding NV or generate 13.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.77%
ValuesDaily Returns

ASML Holding NV  vs.  APPLE INC 275

 Performance 
       Timeline  
ASML Holding NV 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain primary indicators, ASML Holding may actually be approaching a critical reversion point that can send shares even higher in March 2025.
APPLE INC 275 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days APPLE INC 275 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APPLE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

ASML Holding and APPLE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ASML Holding and APPLE

The main advantage of trading using opposite ASML Holding and APPLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, APPLE 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 APPLE will offset losses from the drop in APPLE's long position.
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The idea behind ASML Holding NV and APPLE INC 275 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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