Correlation Between Tenaris SA and Four Seasons

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

Diversification Opportunities for Tenaris SA and Four Seasons

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Tenaris and Four is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons Education 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 Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of Tenaris SA i.e., Tenaris SA and Four Seasons go up and down completely randomly.

Pair Corralation between Tenaris SA and Four Seasons

Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 1.1 times more return on investment than Four Seasons. However, Tenaris SA is 1.1 times more volatile than Four Seasons Education. It trades about 0.4 of its potential returns per unit of risk. Four Seasons Education is currently generating about -0.22 per unit of risk. If you would invest  3,255  in Tenaris SA ADR on September 3, 2024 and sell it today you would earn a total of  578.00  from holding Tenaris SA ADR or generate 17.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Tenaris SA ADR  vs.  Four Seasons Education

 Performance 
       Timeline  
Tenaris SA ADR 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA ADR are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Tenaris SA unveiled solid returns over the last few months and may actually be approaching a breakup point.
Four Seasons Education 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Four Seasons Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Four Seasons is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Tenaris SA and Four Seasons Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tenaris SA and Four Seasons

The main advantage of trading using opposite Tenaris SA and Four Seasons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, Four Seasons 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 Four Seasons will offset losses from the drop in Four Seasons' long position.
The idea behind Tenaris SA ADR and Four Seasons Education 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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