Correlation Between ASML Holding and Telefnica Brasil

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

Diversification Opportunities for ASML Holding and Telefnica Brasil

0.61

Correlation Coefficient

ASML Holding  Telefnica Brasil

Poor diversification

The 3 months correlation between ASML and Telefnica is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Telefnica Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica Brasil 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 Telefnica Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica Brasil has no effect on the direction of ASML Holding i.e., ASML Holding and Telefnica Brasil go up and down completely randomly.

Pair Corralation between ASML Holding and Telefnica Brasil

Assuming the 90 days trading horizon ASML Holding is expected to generate 2.61 times less return on investment than Telefnica Brasil. In addition to that, ASML Holding is 1.53 times more volatile than Telefnica Brasil SA. It trades about 0.04 of its total potential returns per unit of risk. Telefnica Brasil SA is currently generating about 0.16 per unit of volatility. If you would invest  2,694  in Telefnica Brasil SA on April 25, 2025 and sell it today you would earn a total of  376.00  from holding Telefnica Brasil SA or generate 13.96% return on investment over 90 days.

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

ASML Holding NV  vs.  Telefnica Brasil SA

ASML Holding NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, ASML Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Telefnica Brasil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telefnica Brasil SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Telefnica Brasil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASML Holding and Telefnica Brasil

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

The idea behind ASML Holding NV and Telefnica Brasil SA 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.

Check out your portfolio center.

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.