Correlation Between Celsius Holdings and ScanSource

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

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

Diversification Opportunities for Celsius Holdings and ScanSource

-0.38

Correlation Coefficient

Celsius Holdings  ScanSource

Very good diversification

The 3 months correlation between Celsius and ScanSource is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and ScanSource go up and down completely randomly.

Pair Corralation between Celsius Holdings and ScanSource

Given the investment horizon of 90 days Celsius Holdings is expected to generate 2.1 times more return on investment than ScanSource. However, Celsius Holdings is 2.1 times more volatile than ScanSource. It trades about 0.31 of its potential returns per unit of risk. ScanSource is currently generating about 0.21 per unit of risk. If you would invest  2,566  in Celsius Holdings on September 16, 2024 and sell it today you would earn a total of  613.00  from holding Celsius Holdings or generate 23.89% 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.  ScanSource

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 current stock price confusion, may contribute to short-horizon losses for the traders.

ScanSource

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ScanSource may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Celsius Holdings and ScanSource

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

The idea behind Celsius Holdings and ScanSource 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.