Correlation Between SHIN-ETSU CHEMICAL and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIN ETSU CHEMICAL and Monster Beverage Corp, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and Monster Beverage.
Diversification Opportunities for SHIN-ETSU CHEMICAL and Monster Beverage
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SHIN-ETSU and Monster is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL 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 SHIN ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and Monster Beverage go up and down completely randomly.
Pair Corralation between SHIN-ETSU CHEMICAL and Monster Beverage
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to generate 0.78 times more return on investment than Monster Beverage. However, SHIN ETSU CHEMICAL is 1.29 times less risky than Monster Beverage. It trades about -0.06 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.07 per unit of risk. If you would invest 3,505 in SHIN ETSU CHEMICAL on September 12, 2024 and sell it today you would lose (72.00) from holding SHIN ETSU CHEMICAL or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. Monster Beverage Corp
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| Monster Beverage Corp |
SHIN-ETSU CHEMICAL and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN-ETSU CHEMICAL and Monster Beverage
The main advantage of trading using opposite SHIN-ETSU CHEMICAL and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL 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.| SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc |
| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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