Correlation Between RENEWI and ASML Holding

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

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

Diversification Opportunities for RENEWI and ASML Holding

-0.36

Correlation Coefficient

RENEWI  ASML Holding

Very good diversification

The 3 months correlation between RENEWI and ASML is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding RENEWI 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 RENEWI 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 RENEWI 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 RENEWI i.e., RENEWI and ASML Holding go up and down completely randomly.

Pair Corralation between RENEWI and ASML Holding

Assuming the 90 days trading horizon RENEWI is expected to generate 53.87 times more return on investment than ASML Holding. However, RENEWI is 53.87 times more volatile than ASML Holding NV. It trades about 0.11 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.09 per unit of risk. If you would invest  25.00  in RENEWI on April 21, 2025 and sell it today you would lose (6.00) from holding RENEWI or give up 24.0% of portfolio value over 90 days.

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

RENEWI  vs.  ASML Holding NV

RENEWI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RENEWI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, RENEWI unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ASML Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RENEWI and ASML Holding

The main advantage of trading using opposite RENEWI and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RENEWI 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 RENEWI 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.