Correlation Between Pettenati and Monster Beverage

Can any of the company-specific risk be diversified away by investing in both Pettenati and Monster Beverage 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 Pettenati and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pettenati SA Industria and Monster Beverage, you can compare the effects of market volatilities on Pettenati and Monster Beverage 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 Pettenati with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pettenati and Monster Beverage.

Diversification Opportunities for Pettenati and Monster Beverage

-0.62

Correlation Coefficient

Pettenati  Monster Beverage

Excellent diversification

The 3 months correlation between Pettenati and Monster is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pettenati SA Industria and Monster Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage and Pettenati 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 Pettenati SA Industria are associated (or correlated) with Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage has no effect on the direction of Pettenati i.e., Pettenati and Monster Beverage go up and down completely randomly.

Pair Corralation between Pettenati and Monster Beverage

Assuming the 90 days trading horizon Pettenati SA Industria is expected to under-perform the Monster Beverage. In addition to that, Pettenati is 1.19 times more volatile than Monster Beverage. It trades about -0.03 of its total potential returns per unit of risk. Monster Beverage is currently generating about -0.02 per unit of volatility. If you would invest  4,115  in Monster Beverage on October 4, 2024 and sell it today you would lose (39.00) from holding Monster Beverage or give up 0.95% of portfolio value over 90 days.

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

Pettenati SA Industria  vs.  Monster Beverage

Pettenati SA Industria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pettenati SA Industria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Monster Beverage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Monster Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pettenati and Monster Beverage

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

The idea behind Pettenati SA Industria and Monster Beverage 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..