Correlation Between Credo Technology and ASML Holding

Can any of the company-specific risk be diversified away by investing in both Credo Technology and ASML Holding 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 Credo Technology and ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Credo Technology Group and ASML Holding NV, you can compare the effects of market volatilities on Credo Technology and ASML Holding 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 Credo Technology with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credo Technology and ASML Holding.

Diversification Opportunities for Credo Technology and ASML Holding

-0.25

Correlation Coefficient

Credo Technology  ASML Holding

Very good diversification

The 3 months correlation between Credo and ASML is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Credo Technology Group and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV and Credo Technology 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 Credo Technology Group are associated (or correlated) with ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of Credo Technology i.e., Credo Technology and ASML Holding go up and down completely randomly.

Pair Corralation between Credo Technology and ASML Holding

Given the investment horizon of 90 days Credo Technology Group is expected to generate 2.18 times more return on investment than ASML Holding. However, Credo Technology is 2.18 times more volatile than ASML Holding NV. It trades about 0.24 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.01 per unit of risk. If you would invest  6,365  in Credo Technology Group on May 27, 2025 and sell it today you would earn a total of  5,176  from holding Credo Technology Group or generate 81.32% return on investment over 90 days.

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

Credo Technology Group  vs.  ASML Holding NV

Credo Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Credo Technology Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Credo Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Credo Technology and ASML Holding

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

The idea behind Credo Technology Group and ASML Holding 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.