Correlation Between NordTelekom Telecommunicatio and Infineon Technologies
Can any of the company-specific risk be diversified away by investing in both NordTelekom Telecommunicatio 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 NordTelekom Telecommunicatio and Infineon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NordTelekom Telecommunications Service and Infineon Technologies AG, you can compare the effects of market volatilities on NordTelekom Telecommunicatio 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 NordTelekom Telecommunicatio with a short position of Infineon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NordTelekom Telecommunicatio and Infineon Technologies.
Diversification Opportunities for NordTelekom Telecommunicatio and Infineon Technologies
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between NordTelekom and Infineon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding NordTelekom Telecommunications and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies and NordTelekom Telecommunicatio 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 NordTelekom Telecommunications Service 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 NordTelekom Telecommunicatio i.e., NordTelekom Telecommunicatio and Infineon Technologies go up and down completely randomly.
Pair Corralation between NordTelekom Telecommunicatio and Infineon Technologies
Assuming the 90 days trading horizon NordTelekom Telecommunications Service is expected to under-perform the Infineon Technologies. In addition to that, NordTelekom Telecommunicatio is 1.37 times more volatile than Infineon Technologies AG. It trades about -0.04 of its total potential returns per unit of risk. Infineon Technologies AG is currently generating about 0.07 per unit of volatility. 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 |
NordTelekom Telecommunications vs. Infineon Technologies AG
Performance |
| Timeline |
| NordTelekom Telecommunicatio |
| Infineon Technologies |
NordTelekom Telecommunicatio and Infineon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NordTelekom Telecommunicatio and Infineon Technologies
The main advantage of trading using opposite NordTelekom Telecommunicatio and Infineon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NordTelekom Telecommunicatio 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.| NordTelekom Telecommunicatio vs. OTP Bank Nyrt | NordTelekom Telecommunicatio vs. MOL Nyrt | NordTelekom Telecommunicatio vs. OPUS GLOBAL Nyrt | NordTelekom Telecommunicatio vs. ALTEO Energiaszolgaltato Nyrt |
| Infineon Technologies vs. OTP Bank Nyrt | Infineon Technologies vs. MOL Nyrt | Infineon Technologies vs. OPUS GLOBAL Nyrt | Infineon Technologies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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