Correlation Between Technology Telecommunicatio and Ares Capital

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

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

Diversification Opportunities for Technology Telecommunicatio and Ares Capital

0.0

Correlation Coefficient

Technology Telecommunicatio  Ares Capital

Pay attention - limited upside

The 3 months correlation between Technology and Ares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Technology Telecommunication A and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Technology Telecommunicatio 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 Technology Telecommunication Acquisition are associated (or correlated) with Ares Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Capital has no effect on the direction of Technology Telecommunicatio i.e., Technology Telecommunicatio and Ares Capital go up and down completely randomly.

Pair Corralation between Technology Telecommunicatio and Ares Capital

If you would invest  2,145  in Ares Capital on December 29, 2024 and sell it today you would earn a total of  66.00  from holding Ares Capital or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Technology Telecommunication A  vs.  Ares Capital

Technology Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Technology Telecommunication Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Technology Telecommunicatio is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ares Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Ares Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Technology Telecommunicatio and Ares Capital

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

The idea behind Technology Telecommunication Acquisition and Ares Capital 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 Transaction History module to view history of all your transactions and understand their impact on performance.