Correlation Between ASML Holding and MEMSCAP SA

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

Diversification Opportunities for ASML Holding and MEMSCAP SA

-0.23

Correlation Coefficient

ASML Holding  MEMSCAP SA

Very good diversification

The 3 months correlation between ASML and MEMSCAP is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and MEMSCAP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEMSCAP SA 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 MEMSCAP SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEMSCAP SA has no effect on the direction of ASML Holding i.e., ASML Holding and MEMSCAP SA go up and down completely randomly.

Pair Corralation between ASML Holding and MEMSCAP SA

Assuming the 90 days trading horizon ASML Holding NV is expected to under-perform the MEMSCAP SA. But the stock apears to be less risky and, when comparing its historical volatility, ASML Holding NV is 1.78 times less risky than MEMSCAP SA. The stock trades about -0.01 of its potential returns per unit of risk. The MEMSCAP SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  365.00  in MEMSCAP SA on May 17, 2025 and sell it today you would earn a total of  43.00  from holding MEMSCAP SA or generate 11.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

ASML Holding NV  vs.  MEMSCAP SA

ASML Holding NV

Risk-Adjusted Performance

Weakest

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

MEMSCAP SA

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in MEMSCAP SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, MEMSCAP SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASML Holding and MEMSCAP SA

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

The idea behind ASML Holding NV and MEMSCAP 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.