Correlation Between DAIRY FARM and ASML Holding

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

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

Diversification Opportunities for DAIRY FARM and ASML Holding

0.49

Correlation Coefficient

DAIRY FARM  ASML Holding

Very weak diversification

The 3 months correlation between DAIRY and ASML is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL 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 DAIRY FARM 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 DAIRY FARM INTL 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 DAIRY FARM i.e., DAIRY FARM and ASML Holding go up and down completely randomly.

Pair Corralation between DAIRY FARM and ASML Holding

Assuming the 90 days trading horizon DAIRY FARM INTL is expected to generate 0.87 times more return on investment than ASML Holding. However, DAIRY FARM INTL is 1.15 times less risky than ASML Holding. It trades about 0.17 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.03 per unit of risk. If you would invest  214.00  in DAIRY FARM INTL on April 24, 2025 and sell it today you would earn a total of  44.00  from holding DAIRY FARM INTL or generate 20.56% return on investment over 90 days.

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

DAIRY FARM INTL  vs.  ASML Holding NV

DAIRY FARM INTL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DAIRY FARM INTL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DAIRY FARM unveiled solid returns over the last few months and may actually be approaching a breakup point.

ASML Holding NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, ASML Holding is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DAIRY FARM and ASML Holding

The main advantage of trading using opposite DAIRY FARM and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM 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 DAIRY FARM INTL 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.