Correlation Between Monster Beverage and Kinnevik Investment

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

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

Diversification Opportunities for Monster Beverage and Kinnevik Investment

-0.54

Correlation Coefficient

Monster Beverage  Kinnevik Investment

Excellent diversification

The 3 months correlation between Monster and Kinnevik is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Monster Beverage 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 Monster Beverage Corp are associated (or correlated) with Kinnevik Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinnevik Investment has no effect on the direction of Monster Beverage i.e., Monster Beverage and Kinnevik Investment go up and down completely randomly.

Pair Corralation between Monster Beverage and Kinnevik Investment

Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.85 times more return on investment than Kinnevik Investment. However, Monster Beverage Corp is 1.18 times less risky than Kinnevik Investment. It trades about -0.01 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about -0.07 per unit of risk. If you would invest  5,313  in Monster Beverage Corp on September 26, 2024 and sell it today you would lose (58.00) from holding Monster Beverage Corp or give up 1.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Monster Beverage Corp  vs.  Kinnevik Investment AB

Monster Beverage Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Monster Beverage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Kinnevik Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinnevik Investment AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Monster Beverage and Kinnevik Investment

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

The idea behind Monster Beverage Corp and Kinnevik Investment AB 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..