Correlation Between Uni President and Monster Beverage

Can any of the company-specific risk be diversified away by investing in both Uni President 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 Uni President and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Uni President China Holdings and Monster Beverage Corp, you can compare the effects of market volatilities on Uni President 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 Uni President with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uni President and Monster Beverage.

Diversification Opportunities for Uni President and Monster Beverage

-0.03

Correlation Coefficient

Uni President  Monster Beverage

Good diversification

The 3 months correlation between Uni and Monster is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Uni President China Holdings 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 Uni President 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 Uni President China Holdings 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 Uni President i.e., Uni President and Monster Beverage go up and down completely randomly.

Pair Corralation between Uni President and Monster Beverage

Assuming the 90 days horizon Uni President China Holdings is expected to generate 3.23 times more return on investment than Monster Beverage. However, Uni President is 3.23 times more volatile than Monster Beverage Corp. It trades about 0.08 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  70.00  in Uni President China Holdings on September 27, 2024 and sell it today you would earn a total of  16.00  from holding Uni President China Holdings or generate 22.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Uni President China Holdings  vs.  Monster Beverage Corp

Uni President China

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Uni President China Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Uni President reported solid returns over the last few months and may actually be approaching a breakup point.

Monster Beverage Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Monster Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Uni President and Monster Beverage

The main advantage of trading using opposite Uni President and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uni President 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.

The idea behind Uni President China Holdings and Monster Beverage Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.