Correlation Between Celsius Holdings and ODDITY Tech

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

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

Diversification Opportunities for Celsius Holdings and ODDITY Tech

-0.58

Correlation Coefficient

Celsius Holdings  ODDITY Tech

Excellent diversification

The 3 months correlation between Celsius and ODDITY is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and ODDITY Tech Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ODDITY Tech 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 ODDITY Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ODDITY Tech has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and ODDITY Tech go up and down completely randomly.

Pair Corralation between Celsius Holdings and ODDITY Tech

Given the investment horizon of 90 days Celsius Holdings is expected to under-perform the ODDITY Tech. In addition to that, Celsius Holdings is 1.21 times more volatile than ODDITY Tech Ltd. It trades about -0.02 of its total potential returns per unit of risk. ODDITY Tech Ltd is currently generating about 0.16 per unit of volatility. If you would invest  3,540  in ODDITY Tech Ltd on September 12, 2024 and sell it today you would earn a total of  1,211  from holding ODDITY Tech Ltd or generate 34.21% return on investment over 90 days.

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

Celsius Holdings  vs.  ODDITY Tech Ltd

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 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.

ODDITY Tech

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ODDITY Tech Ltd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ODDITY Tech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celsius Holdings and ODDITY Tech

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

The idea behind Celsius Holdings and ODDITY Tech Ltd 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.