Correlation Between ASM International and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both ASM International and Tokyo Electron 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 ASM International and Tokyo Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASM International NV and Tokyo Electron Limited, you can compare the effects of market volatilities on ASM International and Tokyo Electron 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 ASM International with a short position of Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASM International and Tokyo Electron.
Diversification Opportunities for ASM International and Tokyo Electron
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASM and Tokyo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ASM International NV and Tokyo Electron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron and ASM International 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 ASM International NV are associated (or correlated) with Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of ASM International i.e., ASM International and Tokyo Electron go up and down completely randomly.
Pair Corralation between ASM International and Tokyo Electron
Assuming the 90 days horizon ASM International NV is expected to under-perform the Tokyo Electron. In addition to that, ASM International is 1.07 times more volatile than Tokyo Electron Limited. It trades about -0.02 of its total potential returns per unit of risk. Tokyo Electron Limited is currently generating about 0.17 per unit of volatility. If you would invest 14,795 in Tokyo Electron Limited on November 4, 2024 and sell it today you would earn a total of 1,695 from holding Tokyo Electron Limited or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASM International NV vs. Tokyo Electron Limited
Performance |
| Timeline |
| ASM International |
| Tokyo Electron |
ASM International and Tokyo Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASM International and Tokyo Electron
The main advantage of trading using opposite ASM International and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASM International position performs unexpectedly, Tokyo Electron 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 Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.| ASM International vs. American Public Education | ASM International vs. GameStop Corp | ASM International vs. Grand Canyon Education | ASM International vs. Strategic Education |
| Tokyo Electron vs. ASML HOLDING NY | Tokyo Electron vs. ASML Holding NV | Tokyo Electron vs. ASML Holding NV | Tokyo Electron vs. Applied 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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