Correlation Between Smith Douglas and Celsius Holdings

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

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

Diversification Opportunities for Smith Douglas and Celsius Holdings

0.67

Correlation Coefficient

Smith Douglas  Celsius Holdings

Poor diversification

The 3 months correlation between Smith and Celsius is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Smith Douglas Homes and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings and Smith Douglas 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 Smith Douglas Homes are associated (or correlated) with Celsius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celsius Holdings has no effect on the direction of Smith Douglas i.e., Smith Douglas and Celsius Holdings go up and down completely randomly.

Pair Corralation between Smith Douglas and Celsius Holdings

Given the investment horizon of 90 days Smith Douglas is expected to generate 3.53 times less return on investment than Celsius Holdings. But when comparing it to its historical volatility, Smith Douglas Homes is 1.51 times less risky than Celsius Holdings. It trades about 0.13 of its potential returns per unit of risk. Celsius Holdings is currently generating about 0.31 of returns per unit of risk over similar time horizon. 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Smith Douglas Homes  vs.  Celsius Holdings

Smith Douglas Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smith Douglas Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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.

Pair Trading with Smith Douglas and Celsius Holdings

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

The idea behind Smith Douglas Homes and Celsius Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.