Correlation Between CHINA HUARONG and Ares Management
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG 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 CHINA HUARONG and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA HUARONG ENERHD 50 and Ares Management Corp, you can compare the effects of market volatilities on CHINA HUARONG 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 CHINA HUARONG with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Ares Management.
Diversification Opportunities for CHINA HUARONG and Ares Management
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and Ares is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp and CHINA HUARONG 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 CHINA HUARONG ENERHD 50 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 Corp has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Ares Management go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Ares Management
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the Ares Management. In addition to that, CHINA HUARONG is 8.77 times more volatile than Ares Management Corp. It trades about -0.03 of its total potential returns per unit of risk. Ares Management Corp is currently generating about 0.11 per unit of volatility. If you would invest 16,292 in Ares Management Corp on September 12, 2024 and sell it today you would earn a total of 630.00 from holding Ares Management Corp or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Ares Management Corp
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Ares Management Corp |
CHINA HUARONG and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Ares Management
The main advantage of trading using opposite CHINA HUARONG and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG 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.| CHINA HUARONG vs. Air Transport Services | CHINA HUARONG vs. Liberty Broadband | CHINA HUARONG vs. TEXAS ROADHOUSE | CHINA HUARONG vs. NORWEGIAN AIR SHUT |
| Ares Management vs. Ameriprise Financial | Ares Management vs. Superior Plus Corp | Ares Management vs. SIVERS SEMICONDUCTORS AB | Ares Management vs. CHINA HUARONG ENERHD 50 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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