Correlation Between Celsius Holdings and Nuvalent

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

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

Diversification Opportunities for Celsius Holdings and Nuvalent

0.59

Correlation Coefficient

Celsius Holdings  Nuvalent

Very weak diversification

The 3 months correlation between Celsius and Nuvalent is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent 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 Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Nuvalent go up and down completely randomly.

Pair Corralation between Celsius Holdings and Nuvalent

Given the investment horizon of 90 days Celsius Holdings is expected to generate 1.82 times more return on investment than Nuvalent. However, Celsius Holdings is 1.82 times more volatile than Nuvalent. It trades about -0.07 of its potential returns per unit of risk. Nuvalent is currently generating about -0.43 per unit of risk. If you would invest  2,845  in Celsius Holdings on September 29, 2024 and sell it today you would lose (199.00) from holding Celsius Holdings or give up 6.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Celsius Holdings  vs.  Nuvalent

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.

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Celsius Holdings and Nuvalent

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

The idea behind Celsius Holdings and Nuvalent 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.