Correlation Between Ares Management and Computer

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

Diversification Opportunities for Ares Management and Computer

0.6

Correlation Coefficient

Ares Management  Computer

Poor diversification

The 3 months correlation between Ares and Computer is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and Computer And Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer And Technologies 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 Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer And Technologies has no effect on the direction of Ares Management i.e., Ares Management and Computer go up and down completely randomly.

Pair Corralation between Ares Management and Computer

Assuming the 90 days horizon Ares Management Corp is expected to generate 0.87 times more return on investment than Computer. However, Ares Management Corp is 1.15 times less risky than Computer. It trades about 0.04 of its potential returns per unit of risk. Computer And Technologies is currently generating about -0.01 per unit of risk. If you would invest  13,024  in Ares Management Corp on April 22, 2025 and sell it today you would earn a total of  2,772  from holding Ares Management Corp or generate 21.28% return on investment over 90 days.

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

Ares Management Corp  vs.  Computer And Technologies

Ares Management Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ares Management reported solid returns over the last few months and may actually be approaching a breakup point.

Computer And Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computer And Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Computer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ares Management and Computer

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

The idea behind Ares Management Corp and Computer And Technologies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.