Correlation Between ASML HOLDING and Universal Display

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

By analyzing existing cross correlation between ASML HOLDING NY and Universal Display, you can compare the effects of market volatilities on ASML HOLDING and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML HOLDING and Universal Display.

Diversification Opportunities for ASML HOLDING and Universal Display

0.89

Correlation Coefficient

ASML HOLDING  Universal Display

Very poor diversification

The 3 months correlation between ASML and Universal is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ASML HOLDING NY and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 NY are associated (or correlated) with Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of ASML HOLDING i.e., ASML HOLDING and Universal Display go up and down completely randomly.

Pair Corralation between ASML HOLDING and Universal Display

Assuming the 90 days trading horizon ASML HOLDING is expected to generate 2.01 times less return on investment than Universal Display. But when comparing it to its historical volatility, ASML HOLDING NY is 1.07 times less risky than Universal Display. It trades about 0.09 of its potential returns per unit of risk. Universal Display is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  9,871  in Universal Display on April 20, 2025 and sell it today you would earn a total of  3,144  from holding Universal Display or generate 31.85% return on investment over 90 days.

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

ASML HOLDING NY  vs.  Universal Display

ASML HOLDING NY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASML HOLDING NY are ranked lower than 7 (%) 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.

Universal Display

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Display are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Universal Display reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASML HOLDING and Universal Display

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

The idea behind ASML HOLDING NY and Universal Display 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.