Correlation Between Ryanair Holdings and Infineon Technologies

Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings 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 Ryanair Holdings and Infineon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ryanair Holdings plc and Infineon Technologies AG, you can compare the effects of market volatilities on Ryanair Holdings 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 Ryanair Holdings with a short position of Infineon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and Infineon Technologies.

Diversification Opportunities for Ryanair Holdings and Infineon Technologies

0.45

Correlation Coefficient

Ryanair Holdings  Infineon Technologies

Very weak diversification

The 3 months correlation between Ryanair and Infineon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies and Ryanair Holdings 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 Ryanair Holdings plc 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 Ryanair Holdings i.e., Ryanair Holdings and Infineon Technologies go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Infineon Technologies

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to generate 1.64 times more return on investment than Infineon Technologies. However, Ryanair Holdings is 1.64 times more volatile than Infineon Technologies AG. It trades about -0.11 of its potential returns per unit of risk. Infineon Technologies AG is currently generating about -0.3 per unit of risk. If you would invest  164,300  in Ryanair Holdings plc on October 8, 2024 and sell it today you would lose (7,500) from holding Ryanair Holdings plc or give up 4.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Ryanair Holdings plc  vs.  Infineon Technologies AG

Ryanair Holdings plc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Ryanair Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Infineon Technologies

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infineon Technologies AG are ranked lower than 3 (%) 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.

Pair Trading with Ryanair Holdings and Infineon Technologies

The main advantage of trading using opposite Ryanair Holdings and Infineon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings 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.

The idea behind Ryanair Holdings plc and Infineon Technologies AG 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.