Correlation Between PLAYTIKA HOLDING and Monster Beverage

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

By analyzing existing cross correlation between PLAYTIKA HOLDING DL 01 and Monster Beverage Corp, you can compare the effects of market volatilities on PLAYTIKA HOLDING and Monster Beverage 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 PLAYTIKA HOLDING with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYTIKA HOLDING and Monster Beverage.

Diversification Opportunities for PLAYTIKA HOLDING and Monster Beverage

0.66

Correlation Coefficient

PLAYTIKA HOLDING  Monster Beverage

Poor diversification

The 3 months correlation between PLAYTIKA and Monster is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING DL 01 are associated (or correlated) with Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and Monster Beverage go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and Monster Beverage

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to under-perform the Monster Beverage. In addition to that, PLAYTIKA HOLDING is 1.58 times more volatile than Monster Beverage Corp. It trades about -0.04 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.06 per unit of volatility. If you would invest  4,930  in Monster Beverage Corp on October 6, 2024 and sell it today you would earn a total of  172.00  from holding Monster Beverage Corp or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.5%
Values	Daily Returns

PLAYTIKA HOLDING DL 01  vs.  Monster Beverage Corp

PLAYTIKA HOLDING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYTIKA HOLDING DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLAYTIKA HOLDING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Monster Beverage Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monster Beverage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLAYTIKA HOLDING and Monster Beverage

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

The idea behind PLAYTIKA HOLDING DL 01 and Monster Beverage Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.