Correlation Between Monster Beverage and JSL SA

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

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

Diversification Opportunities for Monster Beverage and JSL SA

-0.34

Correlation Coefficient

Monster Beverage  JSL SA

Very good diversification

The 3 months correlation between Monster and JSL is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and JSL SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSL SA 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 are associated (or correlated) with JSL SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSL SA has no effect on the direction of Monster Beverage i.e., Monster Beverage and JSL SA go up and down completely randomly.

Pair Corralation between Monster Beverage and JSL SA

Assuming the 90 days trading horizon Monster Beverage is expected to generate 0.31 times more return on investment than JSL SA. However, Monster Beverage is 3.19 times less risky than JSL SA. It trades about -0.08 of its potential returns per unit of risk. JSL SA is currently generating about -0.04 per unit of risk. If you would invest  4,064  in Monster Beverage on October 10, 2024 and sell it today you would lose (112.00) from holding Monster Beverage or give up 2.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Monster Beverage  vs.  JSL SA

Monster Beverage

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Monster Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

JSL SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JSL SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Monster Beverage and JSL SA

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

The idea behind Monster Beverage and JSL SA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.