Correlation Between S E and Monster Beverage

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

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

Diversification Opportunities for S E and Monster Beverage

0.41

Correlation Coefficient

S E  Monster Beverage

Very weak diversification

The 3 months correlation between SEBA and Monster is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding S E BANKEN A 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 S E 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 S E BANKEN A 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 S E i.e., S E and Monster Beverage go up and down completely randomly.

Pair Corralation between S E and Monster Beverage

Assuming the 90 days trading horizon S E BANKEN A is expected to generate 1.05 times more return on investment than Monster Beverage. However, S E is 1.05 times more volatile than Monster Beverage Corp. It trades about 0.12 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.02 per unit of risk. If you would invest  1,360  in S E BANKEN A on April 23, 2025 and sell it today you would earn a total of  115.00  from holding S E BANKEN A or generate 8.46% return on investment over 90 days.

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

S E BANKEN A   vs.  Monster Beverage Corp

S E BANKEN

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in S E BANKEN A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, S E may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Monster Beverage Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monster Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with S E and Monster Beverage

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

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.