Correlation Between Applied Materials and ASM International

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

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

Diversification Opportunities for Applied Materials and ASM International

0.4

Correlation Coefficient

Applied Materials  ASM International

Very weak diversification

The 3 months correlation between Applied and ASM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and ASM International NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASM International and Applied Materials 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 Applied Materials are associated (or correlated) with ASM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASM International has no effect on the direction of Applied Materials i.e., Applied Materials and ASM International go up and down completely randomly.

Pair Corralation between Applied Materials and ASM International

Given the investment horizon of 90 days Applied Materials is expected to generate 0.72 times more return on investment than ASM International. However, Applied Materials is 1.38 times less risky than ASM International. It trades about 0.09 of its potential returns per unit of risk. ASM International NV is currently generating about -0.04 per unit of risk. If you would invest  16,751  in Applied Materials on May 11, 2025 and sell it today you would earn a total of  1,736  from holding Applied Materials or generate 10.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Applied Materials  vs.  ASM International NV

Applied Materials

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Applied Materials may actually be approaching a critical reversion point that can send shares even higher in September 2025.

ASM International

Risk-Adjusted Performance

Weakest

Over the last 90 days ASM International NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ASM International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Applied Materials and ASM International

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

The idea behind Applied Materials and ASM International 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.