Correlation Between Cion Investment and Ares Management

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

By analyzing existing cross correlation between Cion Investment Corp and Ares Management LP, you can compare the effects of market volatilities on Cion Investment and Ares Management 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 Cion Investment with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cion Investment and Ares Management.

Diversification Opportunities for Cion Investment and Ares Management

-0.06

Correlation Coefficient

Cion Investment  Ares Management

Good diversification

The 3 months correlation between Cion and Ares is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cion Investment Corp and Ares Management LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management LP and Cion Investment 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 Cion Investment Corp are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management LP has no effect on the direction of Cion Investment i.e., Cion Investment and Ares Management go up and down completely randomly.

Pair Corralation between Cion Investment and Ares Management

Given the investment horizon of 90 days Cion Investment Corp is expected to under-perform the Ares Management. But the stock apears to be less risky and, when comparing its historical volatility, Cion Investment Corp is 1.7 times less risky than Ares Management. The stock trades about -0.01 of its potential returns per unit of risk. The Ares Management LP is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  14,112  in Ares Management LP on September 2, 2024 and sell it today you would earn a total of  3,561  from holding Ares Management LP or generate 25.23% return on investment over 90 days.

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

Cion Investment Corp  vs.  Ares Management LP

Cion Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cion Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cion Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ares Management LP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management LP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Ares Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cion Investment and Ares Management

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

The idea behind Cion Investment Corp and Ares Management LP 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.