Correlation Between Tianjin Capital and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Tianjin Capital 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 Tianjin Capital and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tianjin Capital Environmental and Monster Beverage Corp, you can compare the effects of market volatilities on Tianjin Capital 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 Tianjin Capital with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and Monster Beverage.
Diversification Opportunities for Tianjin Capital and Monster Beverage
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tianjin and Monster is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental 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 Tianjin Capital 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 Tianjin Capital Environmental 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 Tianjin Capital i.e., Tianjin Capital and Monster Beverage go up and down completely randomly.
Pair Corralation between Tianjin Capital and Monster Beverage
Assuming the 90 days horizon Tianjin Capital is expected to generate 2.46 times less return on investment than Monster Beverage. In addition to that, Tianjin Capital is 1.02 times more volatile than Monster Beverage Corp. It trades about 0.07 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.17 per unit of volatility. If you would invest 4,856 in Monster Beverage Corp on August 31, 2024 and sell it today you would earn a total of 364.00 from holding Monster Beverage Corp or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tianjin Capital Environmental vs. Monster Beverage Corp
Performance |
| Timeline |
| Tianjin Capital Envi |
| Monster Beverage Corp |
Tianjin Capital and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tianjin Capital and Monster Beverage
The main advantage of trading using opposite Tianjin Capital and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital 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.| Tianjin Capital vs. Altair Engineering | Tianjin Capital vs. Air New Zealand | Tianjin Capital vs. SCIENCE IN SPORT | Tianjin Capital vs. WIZZ AIR HLDGUNSPADR4 |
| Monster Beverage vs. Tianjin Capital Environmental | Monster Beverage vs. Perma Fix Environmental Services | Monster Beverage vs. Warner Music Group | Monster Beverage vs. Zoom Video Communications |
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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