Correlation Between ASML Holding and KLA Tencor
Can any of the company-specific risk be diversified away by investing in both ASML Holding and KLA Tencor 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 KLA Tencor 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 KLA Tencor, you can compare the effects of market volatilities on ASML Holding and KLA Tencor 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 KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and KLA Tencor.
Diversification Opportunities for ASML Holding and KLA Tencor
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ASML and KLA is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of ASML Holding i.e., ASML Holding and KLA Tencor go up and down completely randomly.
Pair Corralation between ASML Holding and KLA Tencor
Assuming the 90 days horizon ASML Holding NV is expected to under-perform the KLA Tencor. But the pink sheet apears to be less risky and, when comparing its historical volatility, ASML Holding NV is 1.03 times less risky than KLA Tencor. The pink sheet trades about -0.09 of its potential returns per unit of risk. The KLA Tencor is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 67,248 in KLA Tencor on August 28, 2024 and sell it today you would lose (2,781) from holding KLA Tencor or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. KLA Tencor
Performance |
| Timeline |
| ASML Holding NV |
| KLA Tencor |
ASML Holding and KLA Tencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and KLA Tencor
The main advantage of trading using opposite ASML Holding and KLA Tencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, KLA Tencor 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 KLA Tencor will offset losses from the drop in KLA Tencor's long position.| ASML Holding vs. ASML Holding NV | ASML Holding vs. Applied Materials | ASML Holding vs. Lam Research Corp | ASML Holding vs. KLA Tencor |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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