Correlation Between Kaufman Broad and ASML Holding

Can any of the company-specific risk be diversified away by investing in both Kaufman Broad and ASML Holding 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 Kaufman Broad and ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kaufman Broad SA and ASML Holding NV, you can compare the effects of market volatilities on Kaufman Broad and ASML Holding 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 Kaufman Broad with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaufman Broad and ASML Holding.

Diversification Opportunities for Kaufman Broad and ASML Holding

0.49

Correlation Coefficient

Kaufman Broad  ASML Holding

Very weak diversification

The 3 months correlation between Kaufman and ASML is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV and Kaufman Broad 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 Kaufman Broad SA are associated (or correlated) with ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of Kaufman Broad i.e., Kaufman Broad and ASML Holding go up and down completely randomly.

Pair Corralation between Kaufman Broad and ASML Holding

Assuming the 90 days horizon Kaufman Broad is expected to generate 11.3 times less return on investment than ASML Holding. But when comparing it to its historical volatility, Kaufman Broad SA is 1.33 times less risky than ASML Holding. It trades about 0.01 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  55,825  in ASML Holding NV on April 20, 2025 and sell it today you would earn a total of  7,775  from holding ASML Holding NV or generate 13.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Kaufman Broad SA  vs.  ASML Holding NV

Kaufman Broad SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaufman Broad SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kaufman Broad is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ASML Holding NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, ASML Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaufman Broad and ASML Holding

The main advantage of trading using opposite Kaufman Broad and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaufman Broad position performs unexpectedly, ASML Holding 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 ASML Holding will offset losses from the drop in ASML Holding's long position.

The idea behind Kaufman Broad SA and ASML Holding NV 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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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.