Correlation Between BASF SE and Infineon Technologies
Can any of the company-specific risk be diversified away by investing in both BASF SE and Infineon Technologies 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 BASF SE and Infineon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASF SE and Infineon Technologies AG, you can compare the effects of market volatilities on BASF SE and Infineon Technologies 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 BASF SE with a short position of Infineon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and Infineon Technologies.
Diversification Opportunities for BASF SE and Infineon Technologies
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between BASF and Infineon is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies and BASF SE 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 BASF SE are associated (or correlated) with Infineon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infineon Technologies has no effect on the direction of BASF SE i.e., BASF SE and Infineon Technologies go up and down completely randomly.
Pair Corralation between BASF SE and Infineon Technologies
Assuming the 90 days trading horizon BASF SE is expected to generate 0.76 times more return on investment than Infineon Technologies. However, BASF SE is 1.32 times less risky than Infineon Technologies. It trades about 0.56 of its potential returns per unit of risk. Infineon Technologies AG is currently generating about 0.39 per unit of risk. If you would invest 1,718,000 in BASF SE on September 18, 2024 and sell it today you would earn a total of 146,400 from holding BASF SE or generate 8.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 72.73% |
| Values | Daily Returns |
BASF SE vs. Infineon Technologies AG
Performance |
| Timeline |
| BASF SE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Infineon Technologies |
BASF SE and Infineon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and Infineon Technologies
The main advantage of trading using opposite BASF SE and Infineon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, Infineon Technologies 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 Infineon Technologies will offset losses from the drop in Infineon Technologies' long position.| BASF SE vs. OTP Bank Nyrt | BASF SE vs. MOL Nyrt | BASF SE vs. OPUS GLOBAL Nyrt | BASF SE vs. ALTEO Energiaszolgaltato Nyrt |
| Infineon Technologies vs. OTP Bank Nyrt | Infineon Technologies vs. MOL Nyrt | Infineon Technologies vs. OPUS GLOBAL Nyrt | Infineon Technologies vs. ALTEO Energiaszolgaltato Nyrt |
Check out your portfolio center.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 CEOs Directory module to screen CEOs from public companies around the world.
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