Correlation Between Monster Beverage and VITEC SOFTWARE

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

Diversification Opportunities for Monster Beverage and VITEC SOFTWARE

-0.28

Correlation Coefficient

Monster Beverage  VITEC SOFTWARE

Very good diversification

The 3 months correlation between Monster and VITEC is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and VITEC SOFTWARE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITEC SOFTWARE GROUP 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 VITEC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITEC SOFTWARE GROUP has no effect on the direction of Monster Beverage i.e., Monster Beverage and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between Monster Beverage and VITEC SOFTWARE

Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the VITEC SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 1.13 times less risky than VITEC SOFTWARE. The stock trades about -0.08 of its potential returns per unit of risk. The VITEC SOFTWARE GROUP is currently generating about 0.59 of returns per unit of risk over similar time horizon. If you would invest  4,338  in VITEC SOFTWARE GROUP on October 10, 2024 and sell it today you would earn a total of  532.00  from holding VITEC SOFTWARE GROUP or generate 12.26% return on investment over 90 days.

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

Monster Beverage Corp  vs.  VITEC SOFTWARE GROUP

Monster Beverage Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Monster Beverage may actually be approaching a critical reversion point that can send shares even higher in February 2025.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VITEC SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monster Beverage and VITEC SOFTWARE

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

The idea behind Monster Beverage Corp and VITEC SOFTWARE GROUP 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.