Correlation Between Celsius Holdings and Analog Devices

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

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

Diversification Opportunities for Celsius Holdings and Analog Devices

0.74

Correlation Coefficient

Celsius Holdings  Analog Devices

Poor diversification

The 3 months correlation between Celsius and Analog is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Analog Devices go up and down completely randomly.

Pair Corralation between Celsius Holdings and Analog Devices

Given the investment horizon of 90 days Celsius Holdings is expected to under-perform the Analog Devices. In addition to that, Celsius Holdings is 2.36 times more volatile than Analog Devices. It trades about -0.05 of its total potential returns per unit of risk. Analog Devices is currently generating about -0.04 per unit of volatility. If you would invest  22,637  in Analog Devices on September 24, 2024 and sell it today you would lose (1,148) from holding Analog Devices or give up 5.07% of portfolio value over 90 days.

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

Celsius Holdings  vs.  Analog Devices

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 latest unfluctuating performance, the Stock's essential indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Analog Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Devices has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Celsius Holdings and Analog Devices

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

The idea behind Celsius Holdings and Analog Devices 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.