Correlation Between Monster Beverage and ELMOS SEMICONDUCTOR

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

Diversification Opportunities for Monster Beverage and ELMOS SEMICONDUCTOR

MonsterELMOSDiversified AwayMonsterELMOSDiversified Away100%
-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Monster and ELMOS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and ELMOS SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELMOS SEMICONDUCTOR has no effect on the direction of Monster Beverage i.e., Monster Beverage and ELMOS SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between Monster Beverage and ELMOS SEMICONDUCTOR

Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the ELMOS SEMICONDUCTOR. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 2.17 times less risky than ELMOS SEMICONDUCTOR. The stock trades about -0.08 of its potential returns per unit of risk. The ELMOS SEMICONDUCTOR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,380  in ELMOS SEMICONDUCTOR on November 19, 2024 and sell it today you would earn a total of  780.00  from holding ELMOS SEMICONDUCTOR or generate 12.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Monster Beverage Corp  vs.  ELMOS SEMICONDUCTOR

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1001020
JavaScript chart by amCharts 3.21.15MOB ELG
       Timeline  
Monster Beverage Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb44454647484950515253
ELMOS SEMICONDUCTOR 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ELMOS SEMICONDUCTOR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, ELMOS SEMICONDUCTOR exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb60657075

Monster Beverage and ELMOS SEMICONDUCTOR Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.56-1.92-1.27-0.63-0.01010.591.191.82.413.01 0.040.060.080.100.120.140.16
JavaScript chart by amCharts 3.21.15MOB ELG
       Returns  

Pair Trading with Monster Beverage and ELMOS SEMICONDUCTOR

The main advantage of trading using opposite Monster Beverage and ELMOS SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR will offset losses from the drop in ELMOS SEMICONDUCTOR's long position.
The idea behind Monster Beverage Corp and ELMOS SEMICONDUCTOR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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