Correlation Between Infineon Technologies and Monks Investment

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

Diversification Opportunities for Infineon Technologies and Monks Investment

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Infineon and Monks is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Infineon Technologies i.e., Infineon Technologies and Monks Investment go up and down completely randomly.

Pair Corralation between Infineon Technologies and Monks Investment

Assuming the 90 days trading horizon Infineon Technologies AG is expected to generate 2.25 times more return on investment than Monks Investment. However, Infineon Technologies is 2.25 times more volatile than Monks Investment Trust. It trades about 0.11 of its potential returns per unit of risk. Monks Investment Trust is currently generating about 0.15 per unit of risk. If you would invest  2,842  in Infineon Technologies AG on October 7, 2024 and sell it today you would earn a total of  242.00  from holding Infineon Technologies AG or generate 8.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Infineon Technologies AG  vs.  Monks Investment Trust

 Performance 
       Timeline  
Infineon Technologies 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Infineon Technologies AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Infineon Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Monks Investment Trust 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monks Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Infineon Technologies and Monks Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Infineon Technologies and Monks Investment

The main advantage of trading using opposite Infineon Technologies and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infineon Technologies position performs unexpectedly, Monks Investment 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 Monks Investment will offset losses from the drop in Monks Investment's long position.
The idea behind Infineon Technologies AG and Monks Investment Trust 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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