Correlation Between Monster Beverage and Qualys

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

Diversification Opportunities for Monster Beverage and Qualys

0.31

Correlation Coefficient

Monster Beverage  Qualys

Weak diversification

The 3 months correlation between Monster and Qualys is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Qualys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualys Inc 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 Qualys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualys Inc has no effect on the direction of Monster Beverage i.e., Monster Beverage and Qualys go up and down completely randomly.

Pair Corralation between Monster Beverage and Qualys

Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 0.91 times more return on investment than Qualys. However, Monster Beverage Corp is 1.1 times less risky than Qualys. It trades about 0.38 of its potential returns per unit of risk. Qualys Inc is currently generating about -0.19 per unit of risk. If you would invest  4,750  in Monster Beverage Corp on December 5, 2024 and sell it today you would earn a total of  732.00  from holding Monster Beverage Corp or generate 15.41% return on investment over 90 days.

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

Monster Beverage Corp  vs.  Qualys Inc

Monster Beverage Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 3 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Qualys Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qualys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 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 Qualys

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

The idea behind Monster Beverage Corp and Qualys Inc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.