Correlation Between Tenaris SA and 09660V2A0

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Can any of the company-specific risk be diversified away by investing in both Tenaris SA and 09660V2A0 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 09660V2A0 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 BNP 4375 01 MAR 33, you can compare the effects of market volatilities on Tenaris SA and 09660V2A0 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 09660V2A0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and 09660V2A0.

Diversification Opportunities for Tenaris SA and 09660V2A0

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Tenaris and 09660V2A0 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and BNP 4375 01 MAR 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP 4375 01 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 09660V2A0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP 4375 01 has no effect on the direction of Tenaris SA i.e., Tenaris SA and 09660V2A0 go up and down completely randomly.

Pair Corralation between Tenaris SA and 09660V2A0

Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 4.29 times more return on investment than 09660V2A0. However, Tenaris SA is 4.29 times more volatile than BNP 4375 01 MAR 33. It trades about 0.26 of its potential returns per unit of risk. BNP 4375 01 MAR 33 is currently generating about 0.0 per unit of risk. If you would invest  3,176  in Tenaris SA ADR on September 13, 2024 and sell it today you would earn a total of  703.00  from holding Tenaris SA ADR or generate 22.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy44.19%
ValuesDaily Returns

Tenaris SA ADR  vs.  BNP 4375 01 MAR 33

 Performance 
       Timeline  
Tenaris SA ADR 

Risk-Adjusted Performance

25 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA ADR are ranked lower than 25 (%) 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.
BNP 4375 01 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BNP 4375 01 MAR 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 09660V2A0 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Tenaris SA and 09660V2A0 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tenaris SA and 09660V2A0

The main advantage of trading using opposite Tenaris SA and 09660V2A0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, 09660V2A0 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 09660V2A0 will offset losses from the drop in 09660V2A0's long position.
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The idea behind Tenaris SA ADR and BNP 4375 01 MAR 33 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.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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