Correlation Between Qualcomm and Infineon Tech

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

Diversification Opportunities for Qualcomm and Infineon Tech

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Qualcomm and Infineon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Qualcomm and Infineon Tech ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Tech ADR and Qualcomm 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 Qualcomm are associated (or correlated) with Infineon Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infineon Tech ADR has no effect on the direction of Qualcomm i.e., Qualcomm and Infineon Tech go up and down completely randomly.

Pair Corralation between Qualcomm and Infineon Tech

Given the investment horizon of 90 days Qualcomm is expected to under-perform the Infineon Tech. But the stock apears to be less risky and, when comparing its historical volatility, Qualcomm is 1.35 times less risky than Infineon Tech. The stock trades about -0.28 of its potential returns per unit of risk. The Infineon Tech ADR is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  2,390  in Infineon Tech ADR on July 5, 2022 and sell it today you would lose (194.00)  from holding Infineon Tech ADR or give up 8.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Qualcomm  vs.  Infineon Tech ADR

 Performance (%) 
       Timeline  
Qualcomm 
Qualcomm Performance
0 of 100
Over the last 90 days Qualcomm has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Qualcomm Price Channel

Infineon Tech ADR 
Infineon Performance
0 of 100
Over the last 90 days Infineon Tech ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Infineon Tech is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Infineon Price Channel

Qualcomm and Infineon Tech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Qualcomm and Infineon Tech

The main advantage of trading using opposite Qualcomm and Infineon Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qualcomm position performs unexpectedly, Infineon Tech 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 Tech will offset losses from the drop in Infineon Tech's long position.
Qualcomm vs. Amazon Inc
The idea behind Qualcomm and Infineon Tech ADR 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.
Infineon Tech vs. Amazon Inc
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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