Correlation Between Infineon Technologies and Alphawave

Can any of the company-specific risk be diversified away by investing in both Infineon Technologies and Alphawave 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 Alphawave 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 Alphawave IP Group, you can compare the effects of market volatilities on Infineon Technologies and Alphawave 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 Alphawave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infineon Technologies and Alphawave.

Diversification Opportunities for Infineon Technologies and Alphawave

-0.17

Correlation Coefficient

Infineon Technologies  Alphawave

Good diversification

The 3 months correlation between Infineon and Alphawave is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and Alphawave IP Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphawave IP Group 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 Alphawave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphawave IP Group has no effect on the direction of Infineon Technologies i.e., Infineon Technologies and Alphawave go up and down completely randomly.

Pair Corralation between Infineon Technologies and Alphawave

Assuming the 90 days horizon Infineon Technologies AG is expected to generate 0.44 times more return on investment than Alphawave. However, Infineon Technologies AG is 2.26 times less risky than Alphawave. It trades about 0.08 of its potential returns per unit of risk. Alphawave IP Group is currently generating about 0.02 per unit of risk. If you would invest  3,398  in Infineon Technologies AG on September 3, 2024 and sell it today you would earn a total of  684.00  from holding Infineon Technologies AG or generate 20.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.0%
Values	Daily Returns

Infineon Technologies AG  vs.  Alphawave IP Group

Infineon Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infineon Technologies AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Infineon Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alphawave IP Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphawave IP Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Alphawave is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Infineon Technologies and Alphawave

The main advantage of trading using opposite Infineon Technologies and Alphawave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infineon Technologies position performs unexpectedly, Alphawave 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 Alphawave will offset losses from the drop in Alphawave's long position.

The idea behind Infineon Technologies AG and Alphawave IP Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.