Correlation Between Monster Beverage and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Tsingtao Brewery 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 Tsingtao Brewery 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 Tsingtao Brewery, you can compare the effects of market volatilities on Monster Beverage and Tsingtao Brewery 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 Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Tsingtao Brewery.
Diversification Opportunities for Monster Beverage and Tsingtao Brewery
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Monster and Tsingtao is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery 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 Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of Monster Beverage i.e., Monster Beverage and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Monster Beverage and Tsingtao Brewery
Assuming the 90 days trading horizon Monster Beverage is expected to generate 4.48 times less return on investment than Tsingtao Brewery. But when comparing it to its historical volatility, Monster Beverage Corp is 3.31 times less risky than Tsingtao Brewery. It trades about 0.05 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 409.00 in Tsingtao Brewery on August 29, 2024 and sell it today you would earn a total of 188.00 from holding Tsingtao Brewery or generate 45.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Tsingtao Brewery
Performance |
| Timeline |
| Monster Beverage Corp |
| Tsingtao Brewery |
Monster Beverage and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Tsingtao Brewery
The main advantage of trading using opposite Monster Beverage and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Tsingtao Brewery 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 Tsingtao Brewery will offset losses from the drop in Tsingtao Brewery's long position.| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Superior Plus Corp | Monster Beverage vs. SIVERS SEMICONDUCTORS AB |
| Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Superior Plus Corp | Tsingtao Brewery vs. SIVERS SEMICONDUCTORS AB |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |