Correlation Between Ares Management and Astral Foods
Can any of the company-specific risk be diversified away by investing in both Ares Management and Astral Foods 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 Astral Foods 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 Astral Foods Limited, you can compare the effects of market volatilities on Ares Management and Astral Foods 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 Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Astral Foods.
Diversification Opportunities for Ares Management and Astral Foods
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ares and Astral is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and Astral Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods Limited 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 Astral Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astral Foods Limited has no effect on the direction of Ares Management i.e., Ares Management and Astral Foods go up and down completely randomly.
Pair Corralation between Ares Management and Astral Foods
Assuming the 90 days horizon Ares Management Corp is expected to generate 0.74 times more return on investment than Astral Foods. However, Ares Management Corp is 1.36 times less risky than Astral Foods. It trades about 0.12 of its potential returns per unit of risk. Astral Foods Limited is currently generating about 0.04 per unit of risk. If you would invest 9,963 in Ares Management Corp on September 4, 2024 and sell it today you would earn a total of 6,489 from holding Ares Management Corp or generate 65.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ares Management Corp vs. Astral Foods Limited
Performance |
| Timeline |
| Ares Management Corp |
| Astral Foods Limited |
Ares Management and Astral Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Astral Foods
The main advantage of trading using opposite Ares Management and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Astral Foods 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 Astral Foods will offset losses from the drop in Astral Foods' long position.| Ares Management vs. Blackstone Group | Ares Management vs. BlackRock | Ares Management vs. The Bank of | Ares Management vs. Ameriprise Financial |
| Astral Foods vs. Archer Daniels Midland | Astral Foods vs. Tyson Foods | Astral Foods vs. Wilmar International Limited | Astral Foods vs. SalMar ASA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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