Correlation Between ASML Holding and Applied Materials,

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

Diversification Opportunities for ASML Holding and Applied Materials,

0.83

Correlation Coefficient

ASML Holding  Applied Materials,

Very poor diversification

The 3 months correlation between ASML and Applied is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Applied Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials, 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 Applied Materials,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials, has no effect on the direction of ASML Holding i.e., ASML Holding and Applied Materials, go up and down completely randomly.

Pair Corralation between ASML Holding and Applied Materials,

Assuming the 90 days trading horizon ASML Holding is expected to generate 2.33 times less return on investment than Applied Materials,. But when comparing it to its historical volatility, ASML Holding NV is 1.19 times less risky than Applied Materials,. It trades about 0.11 of its potential returns per unit of risk. Applied Materials, is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  7,829  in Applied Materials, on April 22, 2025 and sell it today you would earn a total of  2,787  from holding Applied Materials, or generate 35.6% return on investment over 90 days.

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

ASML Holding NV  vs.  Applied Materials,

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 somewhat weak primary indicators, ASML Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

Applied Materials,

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials, are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Applied Materials, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASML Holding and Applied Materials,

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

The idea behind ASML Holding NV and Applied Materials, 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 Anywhere module to track or share privately all of your investments from the convenience of any device.