Correlation Between Ares Management and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Ares Management and Sunny Optical 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 Sunny Optical 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 Sunny Optical Technology, you can compare the effects of market volatilities on Ares Management and Sunny Optical 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 Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Sunny Optical.
Diversification Opportunities for Ares Management and Sunny Optical
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ares and Sunny is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of Ares Management i.e., Ares Management and Sunny Optical go up and down completely randomly.
Pair Corralation between Ares Management and Sunny Optical
Assuming the 90 days horizon Ares Management is expected to generate 1.77 times less return on investment than Sunny Optical. But when comparing it to its historical volatility, Ares Management Corp is 1.62 times less risky than Sunny Optical. It trades about 0.15 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 635.00 in Sunny Optical Technology on September 13, 2024 and sell it today you would earn a total of 160.00 from holding Sunny Optical Technology or generate 25.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management Corp vs. Sunny Optical Technology
Performance |
| Timeline |
| Ares Management Corp |
| Sunny Optical Technology |
Ares Management and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Sunny Optical
The main advantage of trading using opposite Ares Management and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Sunny Optical 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 Sunny Optical will offset losses from the drop in Sunny Optical's long position.| Ares Management vs. Air Transport Services | Ares Management vs. USWE SPORTS AB | Ares Management vs. CSSC Offshore Marine | Ares Management vs. MIRAMAR HOTEL INV |
| Sunny Optical vs. Hubbell Incorporated | Sunny Optical vs. TDK Corporation | Sunny Optical vs. Superior Plus Corp | Sunny Optical vs. SIVERS SEMICONDUCTORS AB |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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