Correlation Between Tenaris SA and Petrofac
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and Petrofac 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 Petrofac 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 Petrofac Ltd ADR, you can compare the effects of market volatilities on Tenaris SA and Petrofac 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 Petrofac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Petrofac.
Diversification Opportunities for Tenaris SA and Petrofac
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tenaris and Petrofac is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Petrofac Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrofac ADR 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 Petrofac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrofac ADR has no effect on the direction of Tenaris SA i.e., Tenaris SA and Petrofac go up and down completely randomly.
Pair Corralation between Tenaris SA and Petrofac
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 0.08 times more return on investment than Petrofac. However, Tenaris SA ADR is 12.71 times less risky than Petrofac. It trades about 0.08 of its potential returns per unit of risk. Petrofac Ltd ADR is currently generating about -0.03 per unit of risk. If you would invest 3,757 in Tenaris SA ADR on November 2, 2024 and sell it today you would earn a total of 58.00 from holding Tenaris SA ADR or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenaris SA ADR vs. Petrofac Ltd ADR
Performance |
| Timeline |
| Tenaris SA ADR |
| Petrofac ADR |
Tenaris SA and Petrofac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and Petrofac
The main advantage of trading using opposite Tenaris SA and Petrofac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, Petrofac 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 Petrofac will offset losses from the drop in Petrofac's long position.| Tenaris SA vs. Cannabusiness Group | Tenaris SA vs. Dewmar Intl Bmc | Tenaris SA vs. Aquagold International | Tenaris SA vs. Morningstar Unconstrained Allocation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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