Ares Acquisition Stock Story

AAC -  USA Stock  

USD 9.74  0.02  0.21%

Ares Acquisition is generating negative expected returns assuming volatility of 0.1615% on return distribution over 60 days investment horizon. As many adventurous traders are excited about financial services space, it is only fair to go over the risk of shorting Ares Acquisition Corp based on its current volatility spike. We will evaluate if the latest Ares Acquisition price volatility suggests a bounce in February.
Published over a week ago
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Will Ares Acquisition (NYSE:AAC) low risk outlook last untill February?
Ares Acquisition has 400.49 M in debt with debt to equity (D/E) ratio of 6.13, demonstrating that Ares Acquisition may be unable to create cash to meet all of its financial commitments. This firm has a current ratio of 1.68, which is typical for the industry and considered as normal.
Volatility is a rate at which the price of Ares Acquisition or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Ares Acquisition may increase or decrease. In other words, similar to Ares Acquisition's beta indicator, it measures the risk of Ares Acquisition and helps estimate the fluctuations that may happen in a short period of time. So if prices of Ares Acquisition fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.

How important is Ares Acquisition's Liquidity

Ares Acquisition financial leverage refers to using borrowed capital as a funding source to finance Ares Acquisition Corp ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Ares Acquisition financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Ares Acquisition's total debt and its cash.

How does Ares Acquisition utilize its cash?

To perform a cash flow analysis of Ares Acquisition, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Ares Acquisition is receiving and how much cash it distributes out in a given period. The Ares Acquisition cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

Ares Acquisition Volatility Drivers

Ares Acquisition unsystematic risk is unique to Ares Acquisition Corp and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Ares Acquisition you can also buy M3-Brigade Acquisition II. You can also mitigate this risk by investing in the shell companies sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Ares Acquisition important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Ares Acquisition income statement and balance sheet. Here are more details about Ares Acquisition volatility.
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