Correlation Between YY Group and Monster Beverage

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

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

Diversification Opportunities for YY Group and Monster Beverage

0.43

Correlation Coefficient

YY Group  Monster Beverage

Very weak diversification

The 3 months correlation between YYGH and Monster is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding YY Group Holding and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp and YY Group 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 YY Group Holding 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 Corp has no effect on the direction of YY Group i.e., YY Group and Monster Beverage go up and down completely randomly.

Pair Corralation between YY Group and Monster Beverage

Given the investment horizon of 90 days YY Group Holding is expected to under-perform the Monster Beverage. In addition to that, YY Group is 4.98 times more volatile than Monster Beverage Corp. It trades about -0.01 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.03 per unit of volatility. If you would invest  5,817  in Monster Beverage Corp on October 9, 2024 and sell it today you would lose (662.00) from holding Monster Beverage Corp or give up 11.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	72.87%
Values	Daily Returns

YY Group Holding  vs.  Monster Beverage Corp

YY Group Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YY Group Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, YY Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Monster Beverage Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Monster Beverage is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with YY Group and Monster Beverage

The main advantage of trading using opposite YY Group and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY Group 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 YY Group Holding and Monster Beverage Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.