Correlation Between Infineon Technologies and NordTelekom Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Infineon Technologies and NordTelekom Telecommunicatio 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 NordTelekom Telecommunicatio 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 NordTelekom Telecommunications Service, you can compare the effects of market volatilities on Infineon Technologies and NordTelekom Telecommunicatio 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 NordTelekom Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infineon Technologies and NordTelekom Telecommunicatio.
Diversification Opportunities for Infineon Technologies and NordTelekom Telecommunicatio
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Infineon and NordTelekom is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and NordTelekom Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NordTelekom Telecommunicatio 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 NordTelekom Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NordTelekom Telecommunicatio has no effect on the direction of Infineon Technologies i.e., Infineon Technologies and NordTelekom Telecommunicatio go up and down completely randomly.
Pair Corralation between Infineon Technologies and NordTelekom Telecommunicatio
Assuming the 90 days trading horizon Infineon Technologies AG is expected to generate 0.73 times more return on investment than NordTelekom Telecommunicatio. However, Infineon Technologies AG is 1.37 times less risky than NordTelekom Telecommunicatio. It trades about 0.07 of its potential returns per unit of risk. NordTelekom Telecommunications Service is currently generating about -0.04 per unit of risk. If you would invest 1,238,000 in Infineon Technologies AG on August 29, 2024 and sell it today you would earn a total of 30,600 from holding Infineon Technologies AG or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.68% |
| Values | Daily Returns |
Infineon Technologies AG vs. NordTelekom Telecommunications
Performance |
| Timeline |
| Infineon Technologies |
| NordTelekom Telecommunicatio |
Infineon Technologies and NordTelekom Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infineon Technologies and NordTelekom Telecommunicatio
The main advantage of trading using opposite Infineon Technologies and NordTelekom Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infineon Technologies position performs unexpectedly, NordTelekom Telecommunicatio 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 NordTelekom Telecommunicatio will offset losses from the drop in NordTelekom Telecommunicatio'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 |
| NordTelekom Telecommunicatio vs. OTP Bank Nyrt | NordTelekom Telecommunicatio vs. MOL Nyrt | NordTelekom Telecommunicatio vs. OPUS GLOBAL Nyrt | NordTelekom Telecommunicatio 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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