Correlation Between PRECISION DRILLING and Tenaris SA
Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING and Tenaris SA 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 PRECISION DRILLING and Tenaris SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PRECISION DRILLING P and Tenaris SA, you can compare the effects of market volatilities on PRECISION DRILLING and Tenaris SA 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 PRECISION DRILLING with a short position of Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and Tenaris SA.
Diversification Opportunities for PRECISION DRILLING and Tenaris SA
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between PRECISION and Tenaris is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and Tenaris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA and PRECISION DRILLING 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 PRECISION DRILLING P are associated (or correlated) with Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and Tenaris SA go up and down completely randomly.
Pair Corralation between PRECISION DRILLING and Tenaris SA
Assuming the 90 days trading horizon PRECISION DRILLING is expected to generate 4.09 times less return on investment than Tenaris SA. But when comparing it to its historical volatility, PRECISION DRILLING P is 1.03 times less risky than Tenaris SA. It trades about 0.1 of its potential returns per unit of risk. Tenaris SA is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 2,915 in Tenaris SA on September 1, 2024 and sell it today you would earn a total of 625.00 from holding Tenaris SA or generate 21.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PRECISION DRILLING P vs. Tenaris SA
Performance |
| Timeline |
| PRECISION DRILLING |
| Tenaris SA |
PRECISION DRILLING and Tenaris SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PRECISION DRILLING and Tenaris SA
The main advantage of trading using opposite PRECISION DRILLING and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA's long position.| PRECISION DRILLING vs. SHELF DRILLING LTD | PRECISION DRILLING vs. Daldrup Shne Aktiengesellschaft | PRECISION DRILLING vs. Superior Plus Corp | PRECISION DRILLING vs. NMI Holdings |
| Tenaris SA vs. GREENX METALS LTD | Tenaris SA vs. PRECISION DRILLING P | Tenaris SA vs. AWILCO DRILLING PLC | Tenaris SA vs. Ribbon Communications |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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