Correlation Between Monster Beverage and Atome Energy

Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Atome Energy 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 Atome Energy 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 Atome Energy PLC, you can compare the effects of market volatilities on Monster Beverage and Atome Energy 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 Atome Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Atome Energy.

Diversification Opportunities for Monster Beverage and Atome Energy

0.46

Correlation Coefficient

Monster Beverage  Atome Energy

Very weak diversification

The 3 months correlation between Monster and Atome is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Atome Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atome Energy PLC 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 Atome Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atome Energy PLC has no effect on the direction of Monster Beverage i.e., Monster Beverage and Atome Energy go up and down completely randomly.

Pair Corralation between Monster Beverage and Atome Energy

Assuming the 90 days trading horizon Monster Beverage is expected to generate 19.12 times less return on investment than Atome Energy. But when comparing it to its historical volatility, Monster Beverage Corp is 4.27 times less risky than Atome Energy. It trades about 0.03 of its potential returns per unit of risk. Atome Energy PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,100  in Atome Energy PLC on April 20, 2025 and sell it today you would earn a total of  1,250  from holding Atome Energy PLC or generate 30.49% return on investment over 90 days.

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

Monster Beverage Corp  vs.  Atome Energy PLC

Monster Beverage Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Monster Beverage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Atome Energy PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atome Energy PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Atome Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monster Beverage and Atome Energy

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

The idea behind Monster Beverage Corp and Atome Energy PLC 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.