Correlation Between Ares Management and DATANG INTL
Can any of the company-specific risk be diversified away by investing in both Ares Management and DATANG INTL 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 Ares Management and DATANG INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Management Corp and DATANG INTL POW, you can compare the effects of market volatilities on Ares Management and DATANG INTL 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 Ares Management with a short position of DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and DATANG INTL.
Diversification Opportunities for Ares Management and DATANG INTL
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ares and DATANG is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW and Ares Management 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 Ares Management Corp are associated (or correlated) with DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of Ares Management i.e., Ares Management and DATANG INTL go up and down completely randomly.
Pair Corralation between Ares Management and DATANG INTL
Assuming the 90 days horizon Ares Management Corp is expected to generate 0.59 times more return on investment than DATANG INTL. However, Ares Management Corp is 1.7 times less risky than DATANG INTL. It trades about 0.13 of its potential returns per unit of risk. DATANG INTL POW is currently generating about 0.04 per unit of risk. If you would invest 13,885 in Ares Management Corp on September 25, 2024 and sell it today you would earn a total of 2,511 from holding Ares Management Corp or generate 18.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Ares Management Corp vs. DATANG INTL POW
Performance |
Timeline |
Ares Management Corp |
DATANG INTL POW |
Ares Management and DATANG INTL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ares Management and DATANG INTL
The main advantage of trading using opposite Ares Management and DATANG INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, DATANG INTL 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 DATANG INTL will offset losses from the drop in DATANG INTL's long position.Ares Management vs. Ubisoft Entertainment SA | Ares Management vs. Tencent Music Entertainment | Ares Management vs. GigaMedia | Ares Management vs. Sabra Health Care |
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Check out your portfolio center.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 CEOs Directory module to screen CEOs from public companies around the world.
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