Correlation Between Compania Cervecerias and Celsius Holdings

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

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

Diversification Opportunities for Compania Cervecerias and Celsius Holdings

0.06

Correlation Coefficient

Compania Cervecerias  Celsius Holdings

Significant diversification

The 3 months correlation between Compania and Celsius is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings and Compania Cervecerias 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 Compania Cervecerias Unidas 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 Compania Cervecerias i.e., Compania Cervecerias and Celsius Holdings go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Celsius Holdings

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 0.43 times more return on investment than Celsius Holdings. However, Compania Cervecerias Unidas is 2.34 times less risky than Celsius Holdings. It trades about 0.0 of its potential returns per unit of risk. Celsius Holdings is currently generating about -0.04 per unit of risk. If you would invest  1,191  in Compania Cervecerias Unidas on September 23, 2024 and sell it today you would lose (24.00) from holding Compania Cervecerias Unidas or give up 2.02% of portfolio value over 90 days.

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

Compania Cervecerias Unidas  vs.  Celsius Holdings

Compania Cervecerias

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Compania Cervecerias may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Celsius Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celsius Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Compania Cervecerias and Celsius Holdings

The main advantage of trading using opposite Compania Cervecerias and Celsius Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias 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 Compania Cervecerias Unidas 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.