Correlation Between NLIGHT and ASML Holding

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

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

Diversification Opportunities for NLIGHT and ASML Holding

0.04

Correlation Coefficient

NLIGHT  ASML Holding

Significant diversification

The 3 months correlation between NLIGHT and ASML is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding nLIGHT Inc 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 NLIGHT 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 nLIGHT Inc 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 NLIGHT i.e., NLIGHT and ASML Holding go up and down completely randomly.

Pair Corralation between NLIGHT and ASML Holding

Given the investment horizon of 90 days nLIGHT Inc is expected to generate 2.42 times more return on investment than ASML Holding. However, NLIGHT is 2.42 times more volatile than ASML Holding NV. It trades about 0.27 of its potential returns per unit of risk. ASML Holding NV is currently generating about -0.04 per unit of risk. If you would invest  1,284  in nLIGHT Inc on May 14, 2025 and sell it today you would earn a total of  1,364  from holding nLIGHT Inc or generate 106.23% return on investment over 90 days.

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

nLIGHT Inc  vs.  ASML Holding NV

nLIGHT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in nLIGHT Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, NLIGHT reported 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 NLIGHT and ASML Holding

The main advantage of trading using opposite NLIGHT and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NLIGHT 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 nLIGHT Inc 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.