Correlation Between Alta Equipment and Celsius Holdings

Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Celsius Holdings 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 Alta Equipment and Celsius Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alta Equipment Group and Celsius Holdings, you can compare the effects of market volatilities on Alta Equipment and Celsius Holdings 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 Alta Equipment with a short position of Celsius Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Celsius Holdings.

Diversification Opportunities for Alta Equipment and Celsius Holdings

-0.22

Correlation Coefficient

Alta Equipment  Celsius Holdings

Very good diversification

The 3 months correlation between Alta and Celsius is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with Celsius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celsius Holdings has no effect on the direction of Alta Equipment i.e., Alta Equipment and Celsius Holdings go up and down completely randomly.

Pair Corralation between Alta Equipment and Celsius Holdings

Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the Celsius Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Alta Equipment Group is 1.33 times less risky than Celsius Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The Celsius Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,794  in Celsius Holdings on December 19, 2024 and sell it today you would earn a total of  243.00  from holding Celsius Holdings or generate 8.7% return on investment over 90 days.

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

Alta Equipment Group  vs.  Celsius Holdings

Alta Equipment Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alta Equipment Group 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.

Celsius Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Celsius Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, Celsius Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alta Equipment and Celsius Holdings

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

The idea behind Alta Equipment Group and Celsius Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.