Correlation Between ASML Holding and ARCA Computer

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

Diversification Opportunities for ASML Holding and ARCA Computer

0.04

Correlation Coefficient

ASML Holding  ARCA Computer

Significant diversification

The 3 months correlation between ASML and ARCA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and ARCA Computer Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCA Computer Technology 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 ARCA Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCA Computer Technology has no effect on the direction of ASML Holding i.e., ASML Holding and ARCA Computer go up and down completely randomly.

Pair Corralation between ASML Holding and ARCA Computer

Given the investment horizon of 90 days ASML Holding NV is expected to under-perform the ARCA Computer. In addition to that, ASML Holding is 2.01 times more volatile than ARCA Computer Technology. It trades about -0.03 of its total potential returns per unit of risk. ARCA Computer Technology is currently generating about 0.35 per unit of volatility. If you would invest  1,158,228  in ARCA Computer Technology on May 10, 2025 and sell it today you would earn a total of  258,115  from holding ARCA Computer Technology or generate 22.29% 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.  ARCA Computer Technology

Pair Trading with ASML Holding and ARCA Computer

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

The idea behind ASML Holding NV and ARCA Computer Technology 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.