Correlation Between Monster Beverage and SCHALTBAU HOLDING

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

Diversification Opportunities for Monster Beverage and SCHALTBAU HOLDING

-0.33

Correlation Coefficient

Monster Beverage  SCHALTBAU HOLDING

Very good diversification

The 3 months correlation between Monster and SCHALTBAU is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and SCHALTBAU HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHALTBAU HOLDING 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 SCHALTBAU HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHALTBAU HOLDING has no effect on the direction of Monster Beverage i.e., Monster Beverage and SCHALTBAU HOLDING go up and down completely randomly.

Pair Corralation between Monster Beverage and SCHALTBAU HOLDING

Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the SCHALTBAU HOLDING. In addition to that, Monster Beverage is 1.74 times more volatile than SCHALTBAU HOLDING. It trades about -0.06 of its total potential returns per unit of risk. SCHALTBAU HOLDING is currently generating about 0.07 per unit of volatility. If you would invest  5,800  in SCHALTBAU HOLDING on October 26, 2024 and sell it today you would earn a total of  200.00  from holding SCHALTBAU HOLDING or generate 3.45% 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.  SCHALTBAU HOLDING

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

SCHALTBAU HOLDING

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCHALTBAU HOLDING are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, SCHALTBAU HOLDING is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Monster Beverage and SCHALTBAU HOLDING

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

The idea behind Monster Beverage Corp and SCHALTBAU HOLDING 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.