Correlation Between Infineon Technologies and NetSol Technologies

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

Diversification Opportunities for Infineon Technologies and NetSol Technologies

-0.11

Correlation Coefficient

Infineon Technologies  NetSol Technologies

Good diversification

The 3 months correlation between Infineon and NetSol is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies 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 NetSol Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetSol Technologies has no effect on the direction of Infineon Technologies i.e., Infineon Technologies and NetSol Technologies go up and down completely randomly.

Pair Corralation between Infineon Technologies and NetSol Technologies

Assuming the 90 days trading horizon Infineon Technologies AG is expected to generate 0.77 times more return on investment than NetSol Technologies. However, Infineon Technologies AG is 1.29 times less risky than NetSol Technologies. It trades about 0.07 of its potential returns per unit of risk. NetSol Technologies is currently generating about 0.01 per unit of risk. If you would invest  2,940  in Infineon Technologies AG on September 22, 2024 and sell it today you would earn a total of  211.00  from holding Infineon Technologies AG or generate 7.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Infineon Technologies AG  vs.  NetSol Technologies

Infineon Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Infineon Technologies AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Infineon Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NetSol Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NetSol Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NetSol 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 Infineon Technologies and NetSol Technologies

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

The idea behind Infineon Technologies AG and NetSol 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.