Correlation Between Monster Beverage and PT Bank

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

Diversification Opportunities for Monster Beverage and PT Bank

-0.15

Correlation Coefficient

Monster Beverage  PT Bank

Good diversification

The 3 months correlation between Monster and BYRA is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of Monster Beverage i.e., Monster Beverage and PT Bank go up and down completely randomly.

Pair Corralation between Monster Beverage and PT Bank

Assuming the 90 days trading horizon Monster Beverage Corp is not expected to generate positive returns. However, Monster Beverage Corp is 3.96 times less risky than PT Bank. It waists most of its returns potential to compensate for thr risk taken. PT Bank is generating about 0.01 per unit of risk. If you would invest  30.00  in PT Bank Rakyat on October 21, 2024 and sell it today you would lose (7.00) from holding PT Bank Rakyat or give up 23.33% of portfolio value over 90 days.

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

Monster Beverage Corp  vs.  PT Bank Rakyat

Monster Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monster Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Monster Beverage and PT Bank

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

The idea behind Monster Beverage Corp and PT Bank Rakyat 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.