Correlation Between Samsung Electronics and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics 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 Samsung Electronics and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Monster Beverage Corp, you can compare the effects of market volatilities on Samsung Electronics 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 Samsung Electronics with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Monster Beverage.
Diversification Opportunities for Samsung Electronics and Monster Beverage
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Monster is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co 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 Samsung Electronics 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 Samsung Electronics Co 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 Samsung Electronics i.e., Samsung Electronics and Monster Beverage go up and down completely randomly.
Pair Corralation between Samsung Electronics and Monster Beverage
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.55 times more return on investment than Monster Beverage. However, Samsung Electronics Co is 1.82 times less risky than Monster Beverage. It trades about -0.3 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.31 per unit of risk. If you would invest 1,950,000 in Samsung Electronics Co on November 8, 2024 and sell it today you would lose (99,908) from holding Samsung Electronics Co or give up 5.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Samsung Electronics Co vs. Monster Beverage Corp
Performance |
| Timeline |
| Samsung Electronics |
| Monster Beverage Corp |
Samsung Electronics and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Monster Beverage
The main advantage of trading using opposite Samsung Electronics and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics 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.| Samsung Electronics vs. Cognizant Technology Solutions | Samsung Electronics vs. Southwest Airlines | Samsung Electronics vs. Verizon Communications | Samsung Electronics vs. Martin Marietta Materials |
| Monster Beverage vs. Steel Dynamics | Monster Beverage vs. Verizon Communications | Monster Beverage vs. Taiwan Semiconductor Manufacturing | Monster Beverage vs. DXC Technology |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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