Correlation Between Monster Beverage and Meituan
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Meituan 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 Meituan 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 Meituan, you can compare the effects of market volatilities on Monster Beverage and Meituan 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 Meituan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Meituan.
Diversification Opportunities for Monster Beverage and Meituan
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Meituan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Meituan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan 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 Meituan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meituan has no effect on the direction of Monster Beverage i.e., Monster Beverage and Meituan go up and down completely randomly.
Pair Corralation between Monster Beverage and Meituan
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.75 times more return on investment than Meituan. However, Monster Beverage Corp is 1.32 times less risky than Meituan. It trades about 0.12 of its potential returns per unit of risk. Meituan is currently generating about -0.09 per unit of risk. If you would invest 4,938 in Monster Beverage Corp on August 25, 2024 and sell it today you would earn a total of 246.00 from holding Monster Beverage Corp or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Meituan
Performance |
| Timeline |
| Monster Beverage Corp |
| Meituan |
Monster Beverage and Meituan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Meituan
The main advantage of trading using opposite Monster Beverage and Meituan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Meituan 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 Meituan will offset losses from the drop in Meituan's long position.| Monster Beverage vs. Fevertree Drinks PLC | Monster Beverage vs. Sumitomo Rubber Industries | Monster Beverage vs. VARIOUS EATERIES LS | Monster Beverage vs. Rayonier Advanced Materials |
| Meituan vs. CN MODERN DAIRY | Meituan vs. New Residential Investment | Meituan vs. AUSTEVOLL SEAFOOD | Meituan vs. Monster Beverage Corp |
Check out your portfolio center.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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