Correlation Between Celsius Holdings and Ark Restaurants

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

By analyzing existing cross correlation between Celsius Holdings and Ark Restaurants Corp, you can compare the effects of market volatilities on Celsius Holdings and Ark Restaurants 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 Ark Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celsius Holdings and Ark Restaurants.

Diversification Opportunities for Celsius Holdings and Ark Restaurants

0.31

Correlation Coefficient

Celsius Holdings  Ark Restaurants

Weak diversification

The 3 months correlation between Celsius and Ark is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants Corp 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 Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Ark Restaurants go up and down completely randomly.

Pair Corralation between Celsius Holdings and Ark Restaurants

Given the investment horizon of 90 days Celsius Holdings is expected to under-perform the Ark Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, Celsius Holdings is 1.94 times less risky than Ark Restaurants. The stock trades about -0.06 of its potential returns per unit of risk. The Ark Restaurants Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,485  in Ark Restaurants Corp on October 8, 2024 and sell it today you would lose (12.00) from holding Ark Restaurants Corp or give up 0.81% of portfolio value over 90 days.

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

Celsius Holdings  vs.  Ark Restaurants Corp

Celsius Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Celsius Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Ark Restaurants Corp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking signals, Ark Restaurants reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celsius Holdings and Ark Restaurants

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

The idea behind Celsius Holdings and Ark Restaurants Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.