Correlation Between Infineon Technologies and PCI PAL

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

Diversification Opportunities for Infineon Technologies and PCI PAL

0.2

Correlation Coefficient

Infineon Technologies  PCI PAL

Modest diversification

The 3 months correlation between Infineon and PCI is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and PCI PAL PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCI PAL PLC 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 PCI PAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCI PAL PLC has no effect on the direction of Infineon Technologies i.e., Infineon Technologies and PCI PAL go up and down completely randomly.

Pair Corralation between Infineon Technologies and PCI PAL

Assuming the 90 days trading horizon Infineon Technologies is expected to generate 1.29 times less return on investment than PCI PAL. In addition to that, Infineon Technologies is 1.48 times more volatile than PCI PAL PLC. It trades about 0.21 of its total potential returns per unit of risk. PCI PAL PLC is currently generating about 0.41 per unit of volatility. If you would invest  6,200  in PCI PAL PLC on October 22, 2024 and sell it today you would earn a total of  750.00  from holding PCI PAL PLC or generate 12.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Infineon Technologies AG  vs.  PCI PAL PLC

Infineon Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Infineon Technologies AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Infineon Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

PCI PAL PLC

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PCI PAL PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PCI PAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infineon Technologies and PCI PAL

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

The idea behind Infineon Technologies AG and PCI PAL PLC 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.