Correlation Between Monster Beverage and SupplyMe Capital

Can any of the company-specific risk be diversified away by investing in both Monster Beverage and SupplyMe Capital 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 SupplyMe Capital 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 SupplyMe Capital PLC, you can compare the effects of market volatilities on Monster Beverage and SupplyMe Capital 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 SupplyMe Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and SupplyMe Capital.

Diversification Opportunities for Monster Beverage and SupplyMe Capital

0.43

Correlation Coefficient

Monster Beverage  SupplyMe Capital

Very weak diversification

The 3 months correlation between Monster and SupplyMe is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and SupplyMe Capital PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SupplyMe Capital PLC 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 SupplyMe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SupplyMe Capital PLC has no effect on the direction of Monster Beverage i.e., Monster Beverage and SupplyMe Capital go up and down completely randomly.

Pair Corralation between Monster Beverage and SupplyMe Capital

Assuming the 90 days trading horizon Monster Beverage is expected to generate 9.61 times less return on investment than SupplyMe Capital. But when comparing it to its historical volatility, Monster Beverage Corp is 15.29 times less risky than SupplyMe Capital. It trades about 0.11 of its potential returns per unit of risk. SupplyMe Capital PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.40  in SupplyMe Capital PLC on December 25, 2024 and sell it today you would lose (0.04) from holding SupplyMe Capital PLC or give up 10.0% of portfolio value over 90 days.

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

Monster Beverage Corp  vs.  SupplyMe Capital PLC

Monster Beverage Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Monster Beverage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SupplyMe Capital PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SupplyMe Capital PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SupplyMe Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monster Beverage and SupplyMe Capital

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

The idea behind Monster Beverage Corp and SupplyMe Capital PLC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.