Correlation Between Infineon Technologies and INDCOMMBK CHINA
Can any of the company-specific risk be diversified away by investing in both Infineon Technologies and INDCOMMBK CHINA 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 Infineon Technologies and INDCOMMBK CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infineon Technologies AG and INDCOMMBK CHINA ADR20, you can compare the effects of market volatilities on Infineon Technologies and INDCOMMBK CHINA 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 Infineon Technologies with a short position of INDCOMMBK CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infineon Technologies and INDCOMMBK CHINA.
Diversification Opportunities for Infineon Technologies and INDCOMMBK CHINA
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Infineon and INDCOMMBK is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and INDCOMMBK CHINA ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDCOMMBK CHINA ADR20 and Infineon Technologies 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 Infineon Technologies AG are associated (or correlated) with INDCOMMBK CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDCOMMBK CHINA ADR20 has no effect on the direction of Infineon Technologies i.e., Infineon Technologies and INDCOMMBK CHINA go up and down completely randomly.
Pair Corralation between Infineon Technologies and INDCOMMBK CHINA
Assuming the 90 days trading horizon Infineon Technologies is expected to generate 11.58 times less return on investment than INDCOMMBK CHINA. But when comparing it to its historical volatility, Infineon Technologies AG is 1.13 times less risky than INDCOMMBK CHINA. It trades about 0.01 of its potential returns per unit of risk. INDCOMMBK CHINA ADR20 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 918.00 in INDCOMMBK CHINA ADR20 on November 2, 2024 and sell it today you would earn a total of 352.00 from holding INDCOMMBK CHINA ADR20 or generate 38.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infineon Technologies AG vs. INDCOMMBK CHINA ADR20
Performance |
| Timeline |
| Infineon Technologies |
| INDCOMMBK CHINA ADR20 |
Infineon Technologies and INDCOMMBK CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infineon Technologies and INDCOMMBK CHINA
The main advantage of trading using opposite Infineon Technologies and INDCOMMBK CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infineon Technologies position performs unexpectedly, INDCOMMBK CHINA 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 INDCOMMBK CHINA will offset losses from the drop in INDCOMMBK CHINA's long position.| Infineon Technologies vs. Samsung Electronics Co | Infineon Technologies vs. Samsung Electronics Co | Infineon Technologies vs. Berkshire Hathaway | Infineon Technologies vs. Berkshire Hathaway |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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