Correlation Between SAN MIGUEL and Monster Beverage

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

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

Diversification Opportunities for SAN MIGUEL and Monster Beverage

0.01

Correlation Coefficient

SAN MIGUEL  Monster Beverage

Significant diversification

The 3 months correlation between SAN and Monster is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY 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 SAN MIGUEL 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 SAN MIGUEL BREWERY 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 SAN MIGUEL i.e., SAN MIGUEL and Monster Beverage go up and down completely randomly.

Pair Corralation between SAN MIGUEL and Monster Beverage

Assuming the 90 days trading horizon SAN MIGUEL BREWERY is expected to under-perform the Monster Beverage. In addition to that, SAN MIGUEL is 2.58 times more volatile than Monster Beverage Corp. It trades about 0.0 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  4,956  in Monster Beverage Corp on December 22, 2024 and sell it today you would earn a total of  246.00  from holding Monster Beverage Corp or generate 4.96% return on investment over 90 days.

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

SAN MIGUEL BREWERY  vs.  Monster Beverage Corp

SAN MIGUEL BREWERY

Risk-Adjusted Performance

Very Weak

Over the last 90 days SAN MIGUEL BREWERY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SAN MIGUEL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Monster Beverage Corp

Risk-Adjusted Performance

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SAN MIGUEL and Monster Beverage

The main advantage of trading using opposite SAN MIGUEL and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAN MIGUEL 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 SAN MIGUEL BREWERY 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.