Correlation Between Celsius Holdings and Ambev SA

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

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

Diversification Opportunities for Celsius Holdings and Ambev SA

0.44

Correlation Coefficient

Celsius Holdings  Ambev SA

Very weak diversification

The 3 months correlation between Celsius and Ambev is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR and Celsius Holdings 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 Celsius Holdings are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Ambev SA go up and down completely randomly.

Pair Corralation between Celsius Holdings and Ambev SA

Given the investment horizon of 90 days Celsius Holdings is expected to under-perform the Ambev SA. In addition to that, Celsius Holdings is 3.32 times more volatile than Ambev SA ADR. It trades about -0.02 of its total potential returns per unit of risk. Ambev SA ADR is currently generating about 0.24 per unit of volatility. If you would invest  179.00  in Ambev SA ADR on December 5, 2024 and sell it today you would earn a total of  34.50  from holding Ambev SA ADR or generate 19.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Celsius Holdings  vs.  Ambev SA ADR

Celsius Holdings

Risk-Adjusted Performance

Very 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.

Ambev SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ambev SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Ambev SA is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Celsius Holdings and Ambev SA

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

The idea behind Celsius Holdings and Ambev SA ADR 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 Commodity Directory module to find actively traded commodities issued by global exchanges.