Correlation Between Tenaris SA and Saipem SpA
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and Saipem SpA 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 Saipem SpA 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 Saipem SpA, you can compare the effects of market volatilities on Tenaris SA and Saipem SpA 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 Saipem SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Saipem SpA.
Diversification Opportunities for Tenaris SA and Saipem SpA
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tenaris and Saipem is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Saipem SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saipem SpA 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 Saipem SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saipem SpA has no effect on the direction of Tenaris SA i.e., Tenaris SA and Saipem SpA go up and down completely randomly.
Pair Corralation between Tenaris SA and Saipem SpA
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 0.94 times more return on investment than Saipem SpA. However, Tenaris SA ADR is 1.07 times less risky than Saipem SpA. It trades about 0.39 of its potential returns per unit of risk. Saipem SpA is currently generating about 0.3 per unit of risk. If you would invest 3,221 in Tenaris SA ADR on August 31, 2024 and sell it today you would earn a total of 588.00 from holding Tenaris SA ADR or generate 18.26% 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. Saipem SpA
Performance |
| Timeline |
| Tenaris SA ADR |
| Saipem SpA |
Tenaris SA and Saipem SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and Saipem SpA
The main advantage of trading using opposite Tenaris SA and Saipem SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, Saipem SpA 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 Saipem SpA will offset losses from the drop in Saipem SpA's long position.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
| Saipem SpA vs. Expro Group Holdings | Saipem SpA vs. ChampionX | Saipem SpA vs. Ranger Energy Services | Saipem SpA vs. Cactus Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |