Correlation Between Infineon Technologies and REVO INSURANCE

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

Diversification Opportunities for Infineon Technologies and REVO INSURANCE

0.18

Correlation Coefficient

Infineon Technologies  REVO INSURANCE

Average diversification

The 3 months correlation between Infineon and REVO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA 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 REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of Infineon Technologies i.e., Infineon Technologies and REVO INSURANCE go up and down completely randomly.

Pair Corralation between Infineon Technologies and REVO INSURANCE

Assuming the 90 days trading horizon Infineon Technologies AG is expected to generate 0.94 times more return on investment than REVO INSURANCE. However, Infineon Technologies AG is 1.06 times less risky than REVO INSURANCE. It trades about 0.08 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about 0.04 per unit of risk. If you would invest  3,109  in Infineon Technologies AG on December 21, 2024 and sell it today you would earn a total of  381.00  from holding Infineon Technologies AG or generate 12.25% return on investment over 90 days.

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

Infineon Technologies AG  vs.  REVO INSURANCE SPA

Infineon Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Infineon Technologies AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Infineon Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

REVO INSURANCE SPA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REVO INSURANCE SPA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, REVO INSURANCE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Infineon Technologies and REVO INSURANCE

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

The idea behind Infineon Technologies AG and REVO INSURANCE SPA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.