Correlation Between Avanos Medical and Tenaris SA

Can any of the company-specific risk be diversified away by investing in both Avanos Medical and Tenaris SA 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 Avanos Medical and Tenaris SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avanos Medical and Tenaris SA, you can compare the effects of market volatilities on Avanos Medical and Tenaris SA 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 Avanos Medical with a short position of Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanos Medical and Tenaris SA.

Diversification Opportunities for Avanos Medical and Tenaris SA

0.51

Correlation Coefficient

Avanos Medical  Tenaris SA

Very weak diversification

The 3 months correlation between Avanos and Tenaris is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and Tenaris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA and Avanos Medical 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 Avanos Medical are associated (or correlated) with Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA has no effect on the direction of Avanos Medical i.e., Avanos Medical and Tenaris SA go up and down completely randomly.

Pair Corralation between Avanos Medical and Tenaris SA

Assuming the 90 days trading horizon Avanos Medical is expected to under-perform the Tenaris SA. In addition to that, Avanos Medical is 1.13 times more volatile than Tenaris SA. It trades about -0.1 of its total potential returns per unit of risk. Tenaris SA is currently generating about 0.02 per unit of volatility. If you would invest  3,600  in Tenaris SA on December 30, 2024 and sell it today you would earn a total of  40.00  from holding Tenaris SA or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Avanos Medical  vs.  Tenaris SA

Avanos Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avanos Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Tenaris SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tenaris SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Avanos Medical and Tenaris SA

The main advantage of trading using opposite Avanos Medical and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanos Medical position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA's long position.

The idea behind Avanos Medical and Tenaris SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.