Correlation Between Ares Management and KBC Ancora
Can any of the company-specific risk be diversified away by investing in both Ares Management and KBC Ancora 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 KBC Ancora 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 KBC Ancora SCA, you can compare the effects of market volatilities on Ares Management and KBC Ancora 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 KBC Ancora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and KBC Ancora.
Diversification Opportunities for Ares Management and KBC Ancora
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ares and KBC is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and KBC Ancora SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Ancora SCA 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 KBC Ancora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Ancora SCA has no effect on the direction of Ares Management i.e., Ares Management and KBC Ancora go up and down completely randomly.
Pair Corralation between Ares Management and KBC Ancora
Assuming the 90 days horizon Ares Management Corp is expected to generate 2.89 times more return on investment than KBC Ancora. However, Ares Management is 2.89 times more volatile than KBC Ancora SCA. It trades about 0.11 of its potential returns per unit of risk. KBC Ancora SCA is currently generating about 0.04 per unit of risk. If you would invest 15,800 in Ares Management Corp on August 29, 2024 and sell it today you would earn a total of 1,054 from holding Ares Management Corp or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ares Management Corp vs. KBC Ancora SCA
Performance |
| Timeline |
| Ares Management Corp |
| KBC Ancora SCA |
Ares Management and KBC Ancora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and KBC Ancora
The main advantage of trading using opposite Ares Management and KBC Ancora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, KBC Ancora 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 KBC Ancora will offset losses from the drop in KBC Ancora's long position.The idea behind Ares Management Corp and KBC Ancora SCA 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.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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