Correlation Between Aristocrat Leisure and ASML Holding

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

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

Diversification Opportunities for Aristocrat Leisure and ASML Holding

0.27

Correlation Coefficient

Aristocrat Leisure  ASML Holding

Modest diversification

The 3 months correlation between Aristocrat and ASML is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited 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 Aristocrat Leisure 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 Aristocrat Leisure Limited 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 Aristocrat Leisure i.e., Aristocrat Leisure and ASML Holding go up and down completely randomly.

Pair Corralation between Aristocrat Leisure and ASML Holding

Assuming the 90 days horizon Aristocrat Leisure is expected to generate 1.09 times less return on investment than ASML Holding. But when comparing it to its historical volatility, Aristocrat Leisure Limited is 1.11 times less risky than ASML Holding. It trades about 0.11 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  55,955  in ASML Holding NV on April 20, 2025 and sell it today you would earn a total of  7,375  from holding ASML Holding NV or generate 13.18% return on investment over 90 days.

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

Aristocrat Leisure Limited  vs.  ASML Holding NV

Aristocrat Leisure

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aristocrat Leisure Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aristocrat Leisure may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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. In spite of rather fragile technical and fundamental indicators, ASML Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aristocrat Leisure and ASML Holding

The main advantage of trading using opposite Aristocrat Leisure and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure 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 Aristocrat Leisure Limited 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..