Correlation Between Deutsche Lufthansa and Infineon Technologies
Can any of the company-specific risk be diversified away by investing in both Deutsche Lufthansa 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 Deutsche Lufthansa and Infineon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Lufthansa AG and Infineon Technologies AG, you can compare the effects of market volatilities on Deutsche Lufthansa 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 Deutsche Lufthansa with a short position of Infineon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Lufthansa and Infineon Technologies.
Diversification Opportunities for Deutsche Lufthansa and Infineon Technologies
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Deutsche and Infineon is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Lufthansa AG and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies and Deutsche Lufthansa 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 Deutsche Lufthansa AG 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 Deutsche Lufthansa i.e., Deutsche Lufthansa and Infineon Technologies go up and down completely randomly.
Pair Corralation between Deutsche Lufthansa and Infineon Technologies
Assuming the 90 days trading horizon Deutsche Lufthansa AG is expected to generate 42.24 times more return on investment than Infineon Technologies. However, Deutsche Lufthansa is 42.24 times more volatile than Infineon Technologies AG. It trades about 0.13 of its potential returns per unit of risk. Infineon Technologies AG is currently generating about 0.02 per unit of risk. If you would invest 333,850 in Deutsche Lufthansa AG on August 31, 2024 and sell it today you would lose (70,850) from holding Deutsche Lufthansa AG or give up 21.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.34% |
| Values | Daily Returns |
Deutsche Lufthansa AG vs. Infineon Technologies AG
Performance |
| Timeline |
| Deutsche Lufthansa |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Infineon Technologies |
Deutsche Lufthansa and Infineon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Lufthansa and Infineon Technologies
The main advantage of trading using opposite Deutsche Lufthansa and Infineon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Lufthansa 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.| Deutsche Lufthansa vs. Nutex Investments PLC | Deutsche Lufthansa vs. OTP Bank Nyrt | Deutsche Lufthansa vs. Infineon Technologies AG | Deutsche Lufthansa vs. NordTelekom Telecommunications Service |
| Infineon Technologies vs. OTP Bank Nyrt | Infineon Technologies vs. OPUS GLOBAL Nyrt | Infineon Technologies vs. Raba Jarmuipari Holding | Infineon Technologies vs. Delta Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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