Correlation Between ASML Holding and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both ASML Holding and HSBC Holdings 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 HSBC Holdings 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 HSBC Holdings plc, you can compare the effects of market volatilities on ASML Holding and HSBC Holdings 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 HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and HSBC Holdings.
Diversification Opportunities for ASML Holding and HSBC Holdings
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASML and HSBC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings plc 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 HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of ASML Holding i.e., ASML Holding and HSBC Holdings go up and down completely randomly.
Pair Corralation between ASML Holding and HSBC Holdings
Assuming the 90 days trading horizon ASML Holding NV is expected to generate 1.66 times more return on investment than HSBC Holdings. However, ASML Holding is 1.66 times more volatile than HSBC Holdings plc. It trades about 0.11 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.13 per unit of risk. If you would invest 7,966 in ASML Holding NV on October 20, 2024 and sell it today you would earn a total of 434.00 from holding ASML Holding NV or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
ASML Holding NV vs. HSBC Holdings plc
Performance |
| Timeline |
| ASML Holding NV |
| HSBC Holdings plc |
ASML Holding and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and HSBC Holdings
The main advantage of trading using opposite ASML Holding and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| ASML Holding vs. G2D Investments | ASML Holding vs. Hormel Foods | ASML Holding vs. salesforce inc | ASML Holding vs. Mangels Industrial SA |
| HSBC Holdings vs. Healthpeak Properties | HSBC Holdings vs. Pure Storage, | HSBC Holdings vs. Datadog, | HSBC Holdings vs. Martin Marietta Materials, |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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