Correlation Between Ares Management and CITIC Securities

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

Diversification Opportunities for Ares Management and CITIC Securities

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ares and CITIC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and CITIC Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Securities 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 CITIC Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Securities has no effect on the direction of Ares Management i.e., Ares Management and CITIC Securities go up and down completely randomly.

Pair Corralation between Ares Management and CITIC Securities

Assuming the 90 days horizon Ares Management is expected to generate 1.52 times less return on investment than CITIC Securities. But when comparing it to its historical volatility, Ares Management Corp is 1.44 times less risky than CITIC Securities. It trades about 0.21 of its potential returns per unit of risk. CITIC Securities is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  209.00  in CITIC Securities on April 23, 2025 and sell it today you would earn a total of  85.00  from holding CITIC Securities or generate 40.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ares Management Corp  vs.  CITIC Securities

 Performance 
       Timeline  
Ares Management Corp 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Ares Management reported solid returns over the last few months and may actually be approaching a breakup point.
CITIC Securities 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Securities are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITIC Securities reported solid returns over the last few months and may actually be approaching a breakup point.

Ares Management and CITIC Securities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ares Management and CITIC Securities

The main advantage of trading using opposite Ares Management and CITIC Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, CITIC Securities 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 CITIC Securities will offset losses from the drop in CITIC Securities' long position.
The idea behind Ares Management Corp and CITIC Securities 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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