Correlation Between Infineon Technologies and BASF SE
Can any of the company-specific risk be diversified away by investing in both Infineon Technologies and BASF SE 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 BASF SE 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 BASF SE, you can compare the effects of market volatilities on Infineon Technologies and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infineon Technologies and BASF SE.
Diversification Opportunities for Infineon Technologies and BASF SE
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Infineon and BASF is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of Infineon Technologies i.e., Infineon Technologies and BASF SE go up and down completely randomly.
Pair Corralation between Infineon Technologies and BASF SE
Assuming the 90 days trading horizon Infineon Technologies AG is expected to generate 1.59 times more return on investment than BASF SE. However, Infineon Technologies is 1.59 times more volatile than BASF SE. It trades about 0.01 of its potential returns per unit of risk. BASF SE is currently generating about 0.02 per unit of risk. If you would invest 1,318,720 in Infineon Technologies AG on September 3, 2024 and sell it today you would lose (50,120) from holding Infineon Technologies AG or give up 3.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.48% |
| Values | Daily Returns |
Infineon Technologies AG vs. BASF SE
Performance |
| Timeline |
| Infineon Technologies |
| BASF SE |
Infineon Technologies and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infineon Technologies and BASF SE
The main advantage of trading using opposite Infineon Technologies and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infineon Technologies position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| Infineon Technologies vs. OTP Bank Nyrt | Infineon Technologies vs. MOL Nyrt | Infineon Technologies vs. OPUS GLOBAL Nyrt | Infineon Technologies vs. ALTEO Energiaszolgaltato Nyrt |
| BASF SE vs. OTP Bank Nyrt | BASF SE vs. Infineon Technologies AG | BASF SE vs. Delta Technologies Nyrt | BASF SE vs. Commerzbank AG |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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