Correlation Between Ares International and Green World
Can any of the company-specific risk be diversified away by investing in both Ares International and Green World 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 International and Green World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares International Corp and Green World Fintech, you can compare the effects of market volatilities on Ares International and Green World 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 International with a short position of Green World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares International and Green World.
Diversification Opportunities for Ares International and Green World
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ares and Green is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ares International Corp and Green World Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green World Fintech and Ares International 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 International Corp are associated (or correlated) with Green World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green World Fintech has no effect on the direction of Ares International i.e., Ares International and Green World go up and down completely randomly.
Pair Corralation between Ares International and Green World
Assuming the 90 days trading horizon Ares International Corp is expected to generate 0.2 times more return on investment than Green World. However, Ares International Corp is 4.9 times less risky than Green World. It trades about -0.22 of its potential returns per unit of risk. Green World Fintech is currently generating about -0.19 per unit of risk. If you would invest 4,900 in Ares International Corp on August 24, 2024 and sell it today you would lose (230.00) from holding Ares International Corp or give up 4.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares International Corp vs. Green World Fintech
Performance |
| Timeline |
| Ares International Corp |
| Green World Fintech |
Ares International and Green World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares International and Green World
The main advantage of trading using opposite Ares International and Green World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares International position performs unexpectedly, Green World 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 Green World will offset losses from the drop in Green World's long position.| Ares International vs. Novatek Microelectronics Corp | Ares International vs. MediaTek | Ares International vs. Quanta Computer | Ares International vs. United Microelectronics |
| Green World vs. Digital China Holdings | Green World vs. Acer E Enabling Service | Green World vs. Sysage Technology Co | Green World vs. Genesis Technology |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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