Correlation Between Infinera and Harmonic

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

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

Diversification Opportunities for Infinera and Harmonic

-0.15

Correlation Coefficient

Infinera  Harmonic

Good diversification

The 3 months correlation between Infinera and Harmonic is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Infinera and Harmonic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmonic and Infinera 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 Infinera are associated (or correlated) with Harmonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmonic has no effect on the direction of Infinera i.e., Infinera and Harmonic go up and down completely randomly.

Pair Corralation between Infinera and Harmonic

Given the investment horizon of 90 days Infinera is expected to generate 0.11 times more return on investment than Harmonic. However, Infinera is 8.85 times less risky than Harmonic. It trades about 0.1 of its potential returns per unit of risk. Harmonic is currently generating about -0.17 per unit of risk. If you would invest  656.00  in Infinera on December 30, 2024 and sell it today you would earn a total of  8.00  from holding Infinera or generate 1.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.13%
Values	Daily Returns

Infinera  vs.  Harmonic

Infinera

Risk-Adjusted Performance

OK

Over the last 90 days Infinera has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Infinera is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Harmonic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harmonic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Infinera and Harmonic

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

The idea behind Infinera and Harmonic 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.