Correlation Between Monster Beverage and CHINA TELECOM
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and CHINA TELECOM 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 CHINA TELECOM 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 CHINA TELECOM H , you can compare the effects of market volatilities on Monster Beverage and CHINA TELECOM 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 CHINA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and CHINA TELECOM.
Diversification Opportunities for Monster Beverage and CHINA TELECOM
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Monster and CHINA is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and CHINA TELECOM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TELECOM H 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 CHINA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA TELECOM H has no effect on the direction of Monster Beverage i.e., Monster Beverage and CHINA TELECOM go up and down completely randomly.
Pair Corralation between Monster Beverage and CHINA TELECOM
If you would invest 52.00 in CHINA TELECOM H on September 12, 2024 and sell it today you would earn a total of 0.00 from holding CHINA TELECOM H or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. CHINA TELECOM H
Performance |
| Timeline |
| Monster Beverage Corp |
| CHINA TELECOM H |
Monster Beverage and CHINA TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and CHINA TELECOM
The main advantage of trading using opposite Monster Beverage and CHINA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, CHINA TELECOM 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 CHINA TELECOM will offset losses from the drop in CHINA TELECOM's long position.| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc |
| CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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