Correlation Between Tenaris SA and Transocean
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and Transocean 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 Transocean 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 Transocean, you can compare the effects of market volatilities on Tenaris SA and Transocean 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 Transocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Transocean.
Diversification Opportunities for Tenaris SA and Transocean
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tenaris and Transocean is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Tenaris SA i.e., Tenaris SA and Transocean go up and down completely randomly.
Pair Corralation between Tenaris SA and Transocean
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 0.45 times more return on investment than Transocean. However, Tenaris SA ADR is 2.2 times less risky than Transocean. It trades about 0.02 of its potential returns per unit of risk. Transocean is currently generating about -0.14 per unit of risk. If you would invest 3,760 in Tenaris SA ADR on November 30, 2024 and sell it today you would earn a total of 25.00 from holding Tenaris SA ADR or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenaris SA ADR vs. Transocean
Performance |
| Timeline |
| Tenaris SA ADR |
| Transocean |
Tenaris SA and Transocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and Transocean
The main advantage of trading using opposite Tenaris SA and Transocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, Transocean 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 Transocean will offset losses from the drop in Transocean's long position.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
| Transocean vs. Timken Company | Transocean vs. Snap On | Transocean vs. Eastman Kodak Co | Transocean vs. JD Sports Fashion |
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 CEOs Directory module to screen CEOs from public companies around the world.
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