Correlation Between ASML Holding and AXT

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

Diversification Opportunities for ASML Holding and AXT

0.08

Correlation Coefficient

ASML Holding  AXT

Significant diversification

The 3 months correlation between ASML and AXT is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc 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 AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of ASML Holding i.e., ASML Holding and AXT go up and down completely randomly.

Pair Corralation between ASML Holding and AXT

Given the investment horizon of 90 days ASML Holding is expected to generate 85.83 times less return on investment than AXT. But when comparing it to its historical volatility, ASML Holding NV is 2.75 times less risky than AXT. It trades about 0.0 of its potential returns per unit of risk. AXT Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  144.00  in AXT Inc on May 18, 2025 and sell it today you would earn a total of  61.00  from holding AXT Inc or generate 42.36% return on investment over 90 days.

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

ASML Holding NV  vs.  AXT Inc

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 quite persistent primary indicators, ASML Holding is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

AXT Inc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in AXT Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, AXT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASML Holding and AXT

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

The idea behind ASML Holding NV and AXT Inc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.