Correlation Between Celsius Holdings and Boston Beer

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

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

Diversification Opportunities for Celsius Holdings and Boston Beer

-0.68

Correlation Coefficient

Celsius Holdings  Boston Beer

Excellent diversification

The 3 months correlation between Celsius and Boston is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Boston Beer go up and down completely randomly.

Pair Corralation between Celsius Holdings and Boston Beer

Given the investment horizon of 90 days Celsius Holdings is expected to generate 1.56 times more return on investment than Boston Beer. However, Celsius Holdings is 1.56 times more volatile than Boston Beer. It trades about 0.01 of its potential returns per unit of risk. Boston Beer is currently generating about 0.01 per unit of risk. If you would invest  3,501  in Celsius Holdings on September 15, 2024 and sell it today you would lose (322.00) from holding Celsius Holdings or give up 9.2% of portfolio value over 90 days.

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

Celsius Holdings  vs.  Boston Beer

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.

Boston Beer

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Boston Beer displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celsius Holdings and Boston Beer

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

The idea behind Celsius Holdings and Boston Beer 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.