Correlation Between Telefnica Brasil and ASML Holding

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

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

Diversification Opportunities for Telefnica Brasil and ASML Holding

0.7

Correlation Coefficient

Telefnica Brasil  ASML Holding

Poor diversification

The 3 months correlation between Telefnica and ASML is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Telefnica Brasil SA 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 Telefnica Brasil 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 Telefnica Brasil SA 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 Telefnica Brasil i.e., Telefnica Brasil and ASML Holding go up and down completely randomly.

Pair Corralation between Telefnica Brasil and ASML Holding

Assuming the 90 days trading horizon Telefnica Brasil SA is expected to generate 0.64 times more return on investment than ASML Holding. However, Telefnica Brasil SA is 1.56 times less risky than ASML Holding. It trades about 0.19 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.06 per unit of risk. If you would invest  2,669  in Telefnica Brasil SA on April 23, 2025 and sell it today you would earn a total of  431.00  from holding Telefnica Brasil SA or generate 16.15% return on investment over 90 days.

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

Telefnica Brasil SA  vs.  ASML Holding NV

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 14 (%) 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.

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 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, ASML Holding may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Telefnica Brasil and ASML Holding

The main advantage of trading using opposite Telefnica Brasil and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefnica Brasil 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 Telefnica Brasil SA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.