Correlation Between Tenaris SA and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and Algoma Steel 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 Tenaris SA and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenaris SA ADR and Algoma Steel Group, you can compare the effects of market volatilities on Tenaris SA and Algoma Steel 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 Tenaris SA with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Algoma Steel.
Diversification Opportunities for Tenaris SA and Algoma Steel
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tenaris and Algoma is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Tenaris SA 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 Tenaris SA ADR are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Tenaris SA i.e., Tenaris SA and Algoma Steel go up and down completely randomly.
Pair Corralation between Tenaris SA and Algoma Steel
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 0.72 times more return on investment than Algoma Steel. However, Tenaris SA ADR is 1.38 times less risky than Algoma Steel. It trades about 0.41 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.05 per unit of risk. If you would invest 3,255 in Tenaris SA ADR on September 5, 2024 and sell it today you would earn a total of 623.00 from holding Tenaris SA ADR or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenaris SA ADR vs. Algoma Steel Group
Performance |
| Timeline |
| Tenaris SA ADR |
| Algoma Steel Group |
Tenaris SA and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and Algoma Steel
The main advantage of trading using opposite Tenaris SA and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Tenaris SA vs. Geospace Technologies | Tenaris SA vs. Weatherford International PLC | Tenaris SA vs. Enerflex | Tenaris SA vs. RPC Inc |
| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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