Correlation Between ASML Holding and SWISS WATER

Can any of the company-specific risk be diversified away by investing in both ASML Holding and SWISS WATER 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 SWISS WATER 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 SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on ASML Holding and SWISS WATER 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 SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and SWISS WATER.

Diversification Opportunities for ASML Holding and SWISS WATER

0.26

Correlation Coefficient

ASML Holding  SWISS WATER

Modest diversification

The 3 months correlation between ASML and SWISS is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of ASML Holding i.e., ASML Holding and SWISS WATER go up and down completely randomly.

Pair Corralation between ASML Holding and SWISS WATER

Assuming the 90 days trading horizon ASML Holding is expected to generate 7.19 times less return on investment than SWISS WATER. But when comparing it to its historical volatility, ASML Holding NV is 1.7 times less risky than SWISS WATER. It trades about 0.03 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  202.00  in SWISS WATER DECAFFCOFFEE on April 24, 2025 and sell it today you would earn a total of  56.00  from holding SWISS WATER DECAFFCOFFEE or generate 27.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ASML Holding NV  vs.  SWISS WATER DECAFFCOFFEE

ASML Holding NV

Risk-Adjusted Performance

Insignificant

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

SWISS WATER DECAFFCOFFEE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SWISS WATER DECAFFCOFFEE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SWISS WATER reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASML Holding and SWISS WATER

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

The idea behind ASML Holding NV and SWISS WATER DECAFFCOFFEE 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.