Correlation Between Tsingtao Brewery and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Tsingtao Brewery 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 Tsingtao Brewery and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsingtao Brewery and Monster Beverage Corp, you can compare the effects of market volatilities on Tsingtao Brewery 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 Tsingtao Brewery with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and Monster Beverage.
Diversification Opportunities for Tsingtao Brewery and Monster Beverage
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tsingtao and Monster is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery 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 Tsingtao Brewery 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 Tsingtao Brewery 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 Tsingtao Brewery i.e., Tsingtao Brewery and Monster Beverage go up and down completely randomly.
Pair Corralation between Tsingtao Brewery and Monster Beverage
Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 2.37 times more return on investment than Monster Beverage. However, Tsingtao Brewery is 2.37 times more volatile than Monster Beverage Corp. It trades about 0.02 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.01 per unit of risk. If you would invest 494.00 in Tsingtao Brewery on August 26, 2024 and sell it today you would earn a total of 73.00 from holding Tsingtao Brewery or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tsingtao Brewery vs. Monster Beverage Corp
Performance |
| Timeline |
| Tsingtao Brewery |
| Monster Beverage Corp |
Tsingtao Brewery and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tsingtao Brewery and Monster Beverage
The main advantage of trading using opposite Tsingtao Brewery and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery 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.| Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery vs. Apple Inc | Tsingtao Brewery 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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