Correlation Between Gaztransport Technigaz and Monster Beverage

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

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

Diversification Opportunities for Gaztransport Technigaz and Monster Beverage

0.77

Correlation Coefficient

Gaztransport Technigaz  Monster Beverage

Poor diversification

The 3 months correlation between Gaztransport and Monster is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA 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 Gaztransport Technigaz 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 Gaztransport Technigaz SA 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 Gaztransport Technigaz i.e., Gaztransport Technigaz and Monster Beverage go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and Monster Beverage

Assuming the 90 days horizon Gaztransport Technigaz SA is expected to generate 1.21 times more return on investment than Monster Beverage. However, Gaztransport Technigaz is 1.21 times more volatile than Monster Beverage Corp. It trades about 0.05 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.01 per unit of risk. If you would invest  9,148  in Gaztransport Technigaz SA on September 21, 2024 and sell it today you would earn a total of  3,912  from holding Gaztransport Technigaz SA or generate 42.76% return on investment over 90 days.

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

Gaztransport Technigaz SA  vs.  Monster Beverage Corp

Gaztransport Technigaz

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaztransport Technigaz 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 4 (%) 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.

Pair Trading with Gaztransport Technigaz and Monster Beverage

The main advantage of trading using opposite Gaztransport Technigaz and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport Technigaz 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 Gaztransport Technigaz SA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.