Correlation Between ASML Holding and Plastic2Oil

Can any of the company-specific risk be diversified away by investing in both ASML Holding and Plastic2Oil 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 Plastic2Oil 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 Plastic2Oil, you can compare the effects of market volatilities on ASML Holding and Plastic2Oil 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 Plastic2Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Plastic2Oil.

Diversification Opportunities for ASML Holding and Plastic2Oil

0.42

Correlation Coefficient

ASML Holding  Plastic2Oil

Very weak diversification

The 3 months correlation between ASML and Plastic2Oil is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Plastic2Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic2Oil 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 Plastic2Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic2Oil has no effect on the direction of ASML Holding i.e., ASML Holding and Plastic2Oil go up and down completely randomly.

Pair Corralation between ASML Holding and Plastic2Oil

Given the investment horizon of 90 days ASML Holding is expected to generate 331.28 times less return on investment than Plastic2Oil. But when comparing it to its historical volatility, ASML Holding NV is 33.98 times less risky than Plastic2Oil. It trades about 0.01 of its potential returns per unit of risk. Plastic2Oil is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.06  in Plastic2Oil on May 25, 2025 and sell it today you would lose (0.05) from holding Plastic2Oil or give up 83.33% of portfolio value over 90 days.

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

ASML Holding NV  vs.  Plastic2Oil

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.

Plastic2Oil

Risk-Adjusted Performance

Fair

Over the last 90 days Plastic2Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak basic indicators, Plastic2Oil demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASML Holding and Plastic2Oil

The main advantage of trading using opposite ASML Holding and Plastic2Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Plastic2Oil 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 Plastic2Oil will offset losses from the drop in Plastic2Oil's long position.

The idea behind ASML Holding NV and Plastic2Oil 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 Transaction History module to view history of all your transactions and understand their impact on performance.