Correlation Between Celsius Holdings and NetEase

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

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

Diversification Opportunities for Celsius Holdings and NetEase

-0.39

Correlation Coefficient

Celsius Holdings  NetEase

Very good diversification

The 3 months correlation between Celsius and NetEase is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase 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 NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and NetEase go up and down completely randomly.

Pair Corralation between Celsius Holdings and NetEase

Given the investment horizon of 90 days Celsius Holdings is expected to generate 2.28 times less return on investment than NetEase. In addition to that, Celsius Holdings is 1.46 times more volatile than NetEase. It trades about 0.01 of its total potential returns per unit of risk. NetEase is currently generating about 0.02 per unit of volatility. If you would invest  8,605  in NetEase on October 25, 2024 and sell it today you would earn a total of  1,347  from holding NetEase or generate 15.65% 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.  NetEase

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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

NetEase

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, NetEase unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celsius Holdings and NetEase

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

The idea behind Celsius Holdings and NetEase 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.