Correlation Between Alliance Resource and Celsius Holdings

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

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

Diversification Opportunities for Alliance Resource and Celsius Holdings

0.16

Correlation Coefficient

Alliance Resource  Celsius Holdings

Average diversification

The 3 months correlation between Alliance and Celsius is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Resource Partners and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings and Alliance Resource 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 Alliance Resource Partners 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 Alliance Resource i.e., Alliance Resource and Celsius Holdings go up and down completely randomly.

Pair Corralation between Alliance Resource and Celsius Holdings

Given the investment horizon of 90 days Alliance Resource is expected to generate 2.21 times less return on investment than Celsius Holdings. But when comparing it to its historical volatility, Alliance Resource Partners is 1.7 times less risky than Celsius Holdings. It trades about 0.36 of its potential returns per unit of risk. Celsius Holdings is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  7,203  in Celsius Holdings on February 23, 2024 and sell it today you would earn a total of  2,146  from holding Celsius Holdings or generate 29.79% return on investment over 90 days.

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

Alliance Resource Partners  vs.  Celsius Holdings

Alliance Resource

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Resource Partners are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady essential indicators, Alliance Resource reported solid returns over the last few months and may actually be approaching a breakup point.

Celsius Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celsius Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, Celsius Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alliance Resource and Celsius Holdings

The main advantage of trading using opposite Alliance Resource and Celsius Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Resource 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 Alliance Resource Partners 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.