Correlation Between Celsius Holdings and Compania Cervecerias

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

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

Diversification Opportunities for Celsius Holdings and Compania Cervecerias

0.06

Correlation Coefficient

Celsius Holdings  Compania Cervecerias

Significant diversification

The 3 months correlation between Celsius and Compania is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Compania Cervecerias go up and down completely randomly.

Pair Corralation between Celsius Holdings and Compania Cervecerias

Given the investment horizon of 90 days Celsius Holdings is expected to under-perform the Compania Cervecerias. In addition to that, Celsius Holdings is 2.47 times more volatile than Compania Cervecerias Unidas. It trades about -0.06 of its total potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.01 per unit of volatility. If you would invest  1,164  in Compania Cervecerias Unidas on September 23, 2024 and sell it today you would earn a total of  3.00  from holding Compania Cervecerias Unidas or generate 0.26% return on investment over 90 days.

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

Celsius Holdings  vs.  Compania Cervecerias Unidas

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.

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.

Pair Trading with Celsius Holdings and Compania Cervecerias

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

The idea behind Celsius Holdings and Compania Cervecerias Unidas 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.