Correlation Between Infineon Technologies and Odyssey Semiconductor

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

Diversification Opportunities for Infineon Technologies and Odyssey Semiconductor

0.65

Correlation Coefficient

Infineon Technologies  Odyssey Semiconductor

Poor diversification

The 3 months correlation between Infineon and Odyssey is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and Odyssey Semiconductor Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Semiconductor 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 Odyssey Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Semiconductor has no effect on the direction of Infineon Technologies i.e., Infineon Technologies and Odyssey Semiconductor go up and down completely randomly.

Pair Corralation between Infineon Technologies and Odyssey Semiconductor

If you would invest  1.60  in Odyssey Semiconductor Technologies on September 23, 2024 and sell it today you would earn a total of  0.40  from holding Odyssey Semiconductor Technologies or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.52%
Values	Daily Returns

Infineon Technologies AG  vs.  Odyssey Semiconductor Technolo

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.

Odyssey Semiconductor

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Semiconductor Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, Odyssey Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infineon Technologies and Odyssey Semiconductor

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

The idea behind Infineon Technologies AG and Odyssey Semiconductor Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.