Correlation Between Infineon Technologies and Deutsche Lufthansa
Can any of the company-specific risk be diversified away by investing in both Infineon Technologies and Deutsche Lufthansa 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 Deutsche Lufthansa 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 Deutsche Lufthansa AG, you can compare the effects of market volatilities on Infineon Technologies and Deutsche Lufthansa 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 Deutsche Lufthansa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infineon Technologies and Deutsche Lufthansa.
Diversification Opportunities for Infineon Technologies and Deutsche Lufthansa
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Infineon and Deutsche is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and Deutsche Lufthansa AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Lufthansa 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 Deutsche Lufthansa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Lufthansa has no effect on the direction of Infineon Technologies i.e., Infineon Technologies and Deutsche Lufthansa go up and down completely randomly.
Pair Corralation between Infineon Technologies and Deutsche Lufthansa
Assuming the 90 days trading horizon Infineon Technologies AG is expected to generate 1.05 times more return on investment than Deutsche Lufthansa. However, Infineon Technologies is 1.05 times more volatile than Deutsche Lufthansa AG. It trades about 0.05 of its potential returns per unit of risk. Deutsche Lufthansa AG is currently generating about -0.26 per unit of risk. If you would invest 1,238,000 in Infineon Technologies AG on August 28, 2024 and sell it today you would earn a total of 15,200 from holding Infineon Technologies AG or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.31% |
| Values | Daily Returns |
Infineon Technologies AG vs. Deutsche Lufthansa AG
Performance |
| Timeline |
| Infineon Technologies |
| Deutsche Lufthansa |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Infineon Technologies and Deutsche Lufthansa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infineon Technologies and Deutsche Lufthansa
The main advantage of trading using opposite Infineon Technologies and Deutsche Lufthansa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infineon Technologies position performs unexpectedly, Deutsche Lufthansa 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 Deutsche Lufthansa will offset losses from the drop in Deutsche Lufthansa'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 |
| Deutsche Lufthansa vs. OTP Bank Nyrt | Deutsche Lufthansa vs. MOL Nyrt | Deutsche Lufthansa vs. OPUS GLOBAL Nyrt | Deutsche Lufthansa 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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