Correlation Between Monster Beverage and PT Jasa

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

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

Diversification Opportunities for Monster Beverage and PT Jasa

-0.69

Correlation Coefficient

Monster Beverage  PT Jasa

Excellent diversification

The 3 months correlation between Monster and 0JM is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and PT Jasa Marga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Jasa Marga and Monster Beverage 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 Monster Beverage Corp are associated (or correlated) with PT Jasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Jasa Marga has no effect on the direction of Monster Beverage i.e., Monster Beverage and PT Jasa go up and down completely randomly.

Pair Corralation between Monster Beverage and PT Jasa

Assuming the 90 days trading horizon Monster Beverage is expected to generate 5.71 times less return on investment than PT Jasa. But when comparing it to its historical volatility, Monster Beverage Corp is 2.71 times less risky than PT Jasa. It trades about 0.02 of its potential returns per unit of risk. PT Jasa Marga is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  16.00  in PT Jasa Marga on September 5, 2024 and sell it today you would earn a total of  9.00  from holding PT Jasa Marga or generate 56.25% return on investment over 90 days.

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

Monster Beverage Corp  vs.  PT Jasa Marga

Monster Beverage Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Monster Beverage unveiled solid returns over the last few months and may actually be approaching a breakup point.

PT Jasa Marga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Jasa Marga has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Monster Beverage and PT Jasa

The main advantage of trading using opposite Monster Beverage and PT Jasa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, PT Jasa 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 PT Jasa will offset losses from the drop in PT Jasa's long position.

The idea behind Monster Beverage Corp and PT Jasa Marga 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.