Correlation Between Amazon and Infineon Technologies

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Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Infineon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Infineon Technologies AG, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Infineon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Infineon Technologies.

Diversification Opportunities for Amazon and Infineon Technologies

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Amazon and Infineon is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Infineon Technologies go up and down completely randomly.

Pair Corralation between Amazon and Infineon Technologies

If you would invest (100.00)  in Infineon Technologies AG on September 5, 2022 and sell it today you would earn a total of  100.00  from holding Infineon Technologies AG or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy0.0%
ValuesDaily Returns

Amazon Inc  vs.  Infineon Technologies AG

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Infineon Technologies 
Infineon Performance
0 of 100
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 weak basic indicators, Infineon Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Amazon and Infineon Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Infineon Technologies

The main advantage of trading using opposite Amazon and Infineon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.
Amazon vs. Carvana Co
The idea behind Amazon Inc 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Infineon Technologies as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Infineon Technologies' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Infineon Technologies' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Infineon Technologies AG.
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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