Correlation Between Celsius Holdings and Coca Cola

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

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

Diversification Opportunities for Celsius Holdings and Coca Cola

-0.51

Correlation Coefficient

Celsius Holdings  Coca Cola

Excellent diversification

The 3 months correlation between Celsius and Coca is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Coca Cola Femsa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Femsa 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Femsa has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Coca Cola go up and down completely randomly.

Pair Corralation between Celsius Holdings and Coca Cola

Given the investment horizon of 90 days Celsius Holdings is expected to under-perform the Coca Cola. In addition to that, Celsius Holdings is 2.21 times more volatile than Coca Cola Femsa SAB. It trades about -0.19 of its total potential returns per unit of risk. Coca Cola Femsa SAB is currently generating about 0.18 per unit of volatility. If you would invest  8,563  in Coca Cola Femsa SAB on July 2, 2024 and sell it today you would earn a total of  477.00  from holding Coca Cola Femsa SAB or generate 5.57% 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.  Coca Cola Femsa SAB

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 weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in October 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Coca Cola Femsa

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola Femsa SAB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Coca Cola reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celsius Holdings and Coca Cola

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

The idea behind Celsius Holdings and Coca Cola Femsa SAB 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 Global Correlations module to find global opportunities by holding instruments from different markets.