Correlation Between Celsius Holdings and Fomento Economico

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

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

Diversification Opportunities for Celsius Holdings and Fomento Economico

-0.11

Correlation Coefficient

Celsius Holdings  Fomento Economico

Good diversification

The 3 months correlation between Celsius and Fomento is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico 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 Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Fomento Economico go up and down completely randomly.

Pair Corralation between Celsius Holdings and Fomento Economico

Given the investment horizon of 90 days Celsius Holdings is expected to under-perform the Fomento Economico. In addition to that, Celsius Holdings is 3.76 times more volatile than Fomento Economico Mexicano. It trades about -0.02 of its total potential returns per unit of risk. Fomento Economico Mexicano is currently generating about 0.19 per unit of volatility. If you would invest  8,253  in Fomento Economico Mexicano on December 5, 2024 and sell it today you would earn a total of  1,051  from holding Fomento Economico Mexicano or generate 12.73% return on investment over 90 days.

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

Celsius Holdings  vs.  Fomento Economico Mexicano

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.

Fomento Economico

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fomento Economico Mexicano are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Fomento Economico is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Celsius Holdings and Fomento Economico

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

The idea behind Celsius Holdings and Fomento Economico Mexicano 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 Transaction History module to view history of all your transactions and understand their impact on performance.