Correlation Between ATMA Participaes and Ares Management

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

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

Diversification Opportunities for ATMA Participaes and Ares Management

-0.86

Correlation Coefficient

ATMA Participaes  Ares Management

Pay attention - limited upside

The 3 months correlation between ATMA and Ares is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding ATMA Participaes SA and Ares Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management and ATMA Participaes 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 ATMA Participaes SA are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management has no effect on the direction of ATMA Participaes i.e., ATMA Participaes and Ares Management go up and down completely randomly.

Pair Corralation between ATMA Participaes and Ares Management

Assuming the 90 days trading horizon ATMA Participaes SA is expected to under-perform the Ares Management. In addition to that, ATMA Participaes is 2.33 times more volatile than Ares Management. It trades about -0.06 of its total potential returns per unit of risk. Ares Management is currently generating about 0.22 per unit of volatility. If you would invest  9,519  in Ares Management on October 23, 2024 and sell it today you would earn a total of  2,165  from holding Ares Management or generate 22.74% return on investment over 90 days.

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

ATMA Participaes SA  vs.  Ares Management

ATMA Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATMA Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ares Management

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management are ranked lower than 17 (%) 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.

Pair Trading with ATMA Participaes and Ares Management

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

The idea behind ATMA Participaes SA and Ares Management 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.