Correlation Between Ares Management and GRUPO CARSO-A1

Can any of the company-specific risk be diversified away by investing in both Ares Management and GRUPO CARSO-A1 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 GRUPO CARSO-A1 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 GRUPO CARSO A1, you can compare the effects of market volatilities on Ares Management and GRUPO CARSO-A1 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 GRUPO CARSO-A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and GRUPO CARSO-A1.

Diversification Opportunities for Ares Management and GRUPO CARSO-A1

-0.15

Correlation Coefficient

Ares Management  GRUPO CARSO-A1

Good diversification

The 3 months correlation between Ares and GRUPO is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 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 GRUPO CARSO-A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of Ares Management i.e., Ares Management and GRUPO CARSO-A1 go up and down completely randomly.

Pair Corralation between Ares Management and GRUPO CARSO-A1

Assuming the 90 days horizon Ares Management Corp is expected to generate 0.42 times more return on investment than GRUPO CARSO-A1. However, Ares Management Corp is 2.36 times less risky than GRUPO CARSO-A1. It trades about 0.1 of its potential returns per unit of risk. GRUPO CARSO A1 is currently generating about -0.07 per unit of risk. If you would invest  16,831  in Ares Management Corp on October 9, 2024 and sell it today you would earn a total of  509.00  from holding Ares Management Corp or generate 3.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ares Management Corp  vs.  GRUPO CARSO A1

Ares Management Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ares Management reported solid returns over the last few months and may actually be approaching a breakup point.

GRUPO CARSO A1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRUPO CARSO A1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GRUPO CARSO-A1 is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ares Management and GRUPO CARSO-A1

The main advantage of trading using opposite Ares Management and GRUPO CARSO-A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, GRUPO CARSO-A1 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 GRUPO CARSO-A1 will offset losses from the drop in GRUPO CARSO-A1's long position.

The idea behind Ares Management Corp and GRUPO CARSO A1 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.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.