Correlation Between International Business and ASML Holding

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

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

Diversification Opportunities for International Business and ASML Holding

0.84

Correlation Coefficient

International Business  ASML Holding

Very poor diversification

The 3 months correlation between International and ASML is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine 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 International Business 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 International Business Machines 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 International Business i.e., International Business and ASML Holding go up and down completely randomly.

Pair Corralation between International Business and ASML Holding

Considering the 90-day investment horizon International Business is expected to generate 1.09 times less return on investment than ASML Holding. But when comparing it to its historical volatility, International Business Machines is 1.34 times less risky than ASML Holding. It trades about 0.03 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  68,162  in ASML Holding NV on May 3, 2025 and sell it today you would earn a total of  1,309  from holding ASML Holding NV or generate 1.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

International Business Machine  vs.  ASML Holding NV

International Business

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ASML Holding NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, ASML Holding is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with International Business and ASML Holding

The main advantage of trading using opposite International Business and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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 International Business Machines 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.