Correlation Between Coca Cola and Celsius Holdings

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

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

Diversification Opportunities for Coca Cola and Celsius Holdings

0.0

Correlation Coefficient

Coca Cola  Celsius Holdings

Pay attention - limited upside

The 3 months correlation between Coca and Celsius is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola HBC and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings and Coca Cola 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 Coca Cola HBC 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 Coca Cola i.e., Coca Cola and Celsius Holdings go up and down completely randomly.

Pair Corralation between Coca Cola and Celsius Holdings

If you would invest  2,845  in Celsius Holdings on November 28, 2024 and sell it today you would lose (157.00) from holding Celsius Holdings or give up 5.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Coca Cola HBC  vs.  Celsius Holdings

Coca Cola HBC

Risk-Adjusted Performance

Very Weak

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

Celsius Holdings

Risk-Adjusted Performance

Weak

Over the last 90 days Celsius Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Celsius Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Coca Cola and Celsius Holdings

The main advantage of trading using opposite Coca Cola and Celsius Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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 Coca Cola HBC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.