Correlation Between Ares Management and Cheche Group

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

Diversification Opportunities for Ares Management and Cheche Group

-0.15

Correlation Coefficient

Ares Management  Cheche Group

Good diversification

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

Pair Corralation between Ares Management and Cheche Group

Assuming the 90 days trading horizon Ares Management Corp is expected to generate 0.49 times more return on investment than Cheche Group. However, Ares Management Corp is 2.06 times less risky than Cheche Group. It trades about 0.26 of its potential returns per unit of risk. Cheche Group Class is currently generating about 0.06 per unit of risk. If you would invest  5,681  in Ares Management Corp on October 27, 2024 and sell it today you would earn a total of  374.00  from holding Ares Management Corp or generate 6.58% 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.  Cheche Group Class

Ares Management Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Ares Management sustained solid returns over the last few months and may actually be approaching a breakup point.

Cheche Group Class

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Cheche Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ares Management and Cheche Group

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

The idea behind Ares Management Corp and Cheche Group Class 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.