Correlation Between Salesforce and Infineon Technologies

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

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

Diversification Opportunities for Salesforce and Infineon Technologies

0.12

Correlation Coefficient

Salesforce  Infineon Technologies

Average diversification

The 3 months correlation between Salesforce and Infineon is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies and Salesforce 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 Salesforce 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 Salesforce i.e., Salesforce and Infineon Technologies go up and down completely randomly.

Pair Corralation between Salesforce and Infineon Technologies

Considering the 90-day investment horizon Salesforce is expected to generate 1.18 times less return on investment than Infineon Technologies. In addition to that, Salesforce is 1.04 times more volatile than Infineon Technologies AG. It trades about 0.09 of its total potential returns per unit of risk. Infineon Technologies AG is currently generating about 0.11 per unit of volatility. If you would invest  2,980  in Infineon Technologies AG on October 7, 2024 and sell it today you would earn a total of  315.00  from holding Infineon Technologies AG or generate 10.57% return on investment over 90 days.

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

Salesforce  vs.  Infineon Technologies AG

Salesforce

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

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. Despite nearly stable basic indicators, Infineon Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Salesforce and Infineon Technologies

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

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.