Correlation Between Ares Management and CSHG Renda

Can any of the company-specific risk be diversified away by investing in both Ares Management and CSHG Renda 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 CSHG Renda into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ares Management and CSHG Renda Urbana, you can compare the effects of market volatilities on Ares Management and CSHG Renda 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 CSHG Renda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and CSHG Renda.

Diversification Opportunities for Ares Management and CSHG Renda

-0.43

Correlation Coefficient

Ares Management  CSHG Renda

Very good diversification

The 3 months correlation between Ares and CSHG is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management and CSHG Renda Urbana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSHG Renda Urbana 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 are associated (or correlated) with CSHG Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSHG Renda Urbana has no effect on the direction of Ares Management i.e., Ares Management and CSHG Renda go up and down completely randomly.

Pair Corralation between Ares Management and CSHG Renda

Assuming the 90 days trading horizon Ares Management is expected to generate 2.2 times more return on investment than CSHG Renda. However, Ares Management is 2.2 times more volatile than CSHG Renda Urbana. It trades about 0.17 of its potential returns per unit of risk. CSHG Renda Urbana is currently generating about -0.05 per unit of risk. If you would invest  5,549  in Ares Management on October 26, 2024 and sell it today you would earn a total of  5,967  from holding Ares Management or generate 107.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.63%
Values	Daily Returns

Ares Management  vs.  CSHG Renda Urbana

Ares Management

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ares Management sustained solid returns over the last few months and may actually be approaching a breakup point.

CSHG Renda Urbana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSHG Renda Urbana has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CSHG Renda is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ares Management and CSHG Renda

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

The idea behind Ares Management and CSHG Renda Urbana 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.