Correlation Between BW Offshore and Celsius Holdings

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

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

Diversification Opportunities for BW Offshore and Celsius Holdings

0.54

Correlation Coefficient

BW Offshore  Celsius Holdings

Very weak diversification

The 3 months correlation between BWOFY and Celsius is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings and BW Offshore 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 BW Offshore Limited 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 BW Offshore i.e., BW Offshore and Celsius Holdings go up and down completely randomly.

Pair Corralation between BW Offshore and Celsius Holdings

Assuming the 90 days horizon BW Offshore Limited is expected to under-perform the Celsius Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, BW Offshore Limited is 3.71 times less risky than Celsius Holdings. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Celsius Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,675  in Celsius Holdings on December 21, 2024 and sell it today you would earn a total of  450.00  from holding Celsius Holdings or generate 16.82% return on investment over 90 days.

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

BW Offshore Limited  vs.  Celsius Holdings

BW Offshore Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days BW Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, BW Offshore is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Celsius Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Celsius Holdings are ranked lower than 5 (%) 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 BW Offshore and Celsius Holdings

The main advantage of trading using opposite BW Offshore and Celsius Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore 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 BW Offshore Limited 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.