Correlation Between Ares Management and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Ares Management and Samsung Electronics 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 Samsung Electronics 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 Samsung Electronics Co, you can compare the effects of market volatilities on Ares Management and Samsung Electronics 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 Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Samsung Electronics.
Diversification Opportunities for Ares Management and Samsung Electronics
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ares and Samsung is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Ares Management i.e., Ares Management and Samsung Electronics go up and down completely randomly.
Pair Corralation between Ares Management and Samsung Electronics
Assuming the 90 days horizon Ares Management Corp is expected to generate 0.94 times more return on investment than Samsung Electronics. However, Ares Management Corp is 1.06 times less risky than Samsung Electronics. It trades about 0.12 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.01 per unit of risk. If you would invest 6,126 in Ares Management Corp on September 26, 2024 and sell it today you would earn a total of 10,804 from holding Ares Management Corp or generate 176.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Ares Management Corp vs. Samsung Electronics Co
Performance |
Timeline |
Ares Management Corp |
Samsung Electronics |
Ares Management and Samsung Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ares Management and Samsung Electronics
The main advantage of trading using opposite Ares Management and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.Ares Management vs. Grupo Carso SAB | Ares Management vs. MUTUIONLINE | Ares Management vs. CECO ENVIRONMENTAL | Ares Management vs. RELIANCE STEEL AL |
Samsung Electronics vs. Warner Music Group | Samsung Electronics vs. Ares Management Corp | Samsung Electronics vs. Algonquin Power Utilities | Samsung Electronics vs. Brockhaus Capital Management |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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