Correlation Between Celsius Holdings and Coca-Cola FEMSA

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

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

Diversification Opportunities for Celsius Holdings and Coca-Cola FEMSA

0.54

Correlation Coefficient

Celsius Holdings  Coca-Cola FEMSA

Very weak diversification

The 3 months correlation between Celsius and Coca-Cola is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA 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 Coca-Cola FEMSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola FEMSA has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Coca-Cola FEMSA go up and down completely randomly.

Pair Corralation between Celsius Holdings and Coca-Cola FEMSA

Given the investment horizon of 90 days Celsius Holdings is expected to generate 0.83 times more return on investment than Coca-Cola FEMSA. However, Celsius Holdings is 1.2 times less risky than Coca-Cola FEMSA. It trades about 0.06 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about 0.0 per unit of risk. If you would invest  2,789  in Celsius Holdings on October 6, 2024 and sell it today you would earn a total of  91.00  from holding Celsius Holdings or generate 3.26% return on investment over 90 days.

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

Celsius Holdings  vs.  Coca Cola FEMSA SAB

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.

Coca Cola FEMSA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coca Cola FEMSA SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Celsius Holdings and Coca-Cola FEMSA

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

The idea behind Celsius Holdings and Coca Cola FEMSA SAB 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.