Correlation Between Ares Acquisition and Roth CH

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

By analyzing existing cross correlation between Ares Acquisition and Roth CH Acquisition, you can compare the effects of market volatilities on Ares Acquisition and Roth CH 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 Acquisition with a short position of Roth CH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Acquisition and Roth CH.

Diversification Opportunities for Ares Acquisition and Roth CH

0.54

Correlation Coefficient

Ares Acquisition  Roth CH

Very weak diversification

The 3 months correlation between Ares and Roth is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ares Acquisition and Roth CH Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roth CH Acquisition and Ares Acquisition 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 Acquisition are associated (or correlated) with Roth CH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roth CH Acquisition has no effect on the direction of Ares Acquisition i.e., Ares Acquisition and Roth CH go up and down completely randomly.

Pair Corralation between Ares Acquisition and Roth CH

Considering the 90-day investment horizon Ares Acquisition is expected to generate 217.33 times less return on investment than Roth CH. But when comparing it to its historical volatility, Ares Acquisition is 477.4 times less risky than Roth CH. It trades about 0.2 of its potential returns per unit of risk. Roth CH Acquisition is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4.42  in Roth CH Acquisition on September 4, 2024 and sell it today you would earn a total of  20.58  from holding Roth CH Acquisition or generate 465.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	41.71%
Values	Daily Returns

Ares Acquisition  vs.  Roth CH Acquisition

Ares Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ares Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ares Acquisition is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Roth CH Acquisition

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roth CH Acquisition are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Roth CH showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ares Acquisition and Roth CH

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

The idea behind Ares Acquisition and Roth CH Acquisition 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.