Correlation Between Monster Beverage and AIXTRON SE

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

Diversification Opportunities for Monster Beverage and AIXTRON SE

-0.6

Correlation Coefficient

Monster Beverage  AIXTRON SE

Excellent diversification

The 3 months correlation between Monster and AIXTRON is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and AIXTRON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIXTRON SE 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 AIXTRON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIXTRON SE has no effect on the direction of Monster Beverage i.e., Monster Beverage and AIXTRON SE go up and down completely randomly.

Pair Corralation between Monster Beverage and AIXTRON SE

Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.47 times more return on investment than AIXTRON SE. However, Monster Beverage Corp is 2.15 times less risky than AIXTRON SE. It trades about 0.12 of its potential returns per unit of risk. AIXTRON SE is currently generating about 0.01 per unit of risk. If you would invest  4,600  in Monster Beverage Corp on February 3, 2025 and sell it today you would earn a total of  727.00  from holding Monster Beverage Corp or generate 15.8% 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.  AIXTRON SE

Monster Beverage Corp

Risk-Adjusted Performance

OK

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

AIXTRON SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days AIXTRON SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AIXTRON SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Monster Beverage and AIXTRON SE

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

The idea behind Monster Beverage Corp and AIXTRON SE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.