Correlation Between DISTRICT METALS and Tenaris SA

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

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

Diversification Opportunities for DISTRICT METALS and Tenaris SA

0.55

Correlation Coefficient

DISTRICT METALS  Tenaris SA

Very weak diversification

The 3 months correlation between DISTRICT and Tenaris is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding DISTRICT METALS and Tenaris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA and DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS i.e., DISTRICT METALS and Tenaris SA go up and down completely randomly.

Pair Corralation between DISTRICT METALS and Tenaris SA

Assuming the 90 days trading horizon DISTRICT METALS is expected to under-perform the Tenaris SA. In addition to that, DISTRICT METALS is 2.42 times more volatile than Tenaris SA. It trades about -0.18 of its total potential returns per unit of risk. Tenaris SA is currently generating about -0.11 per unit of volatility. If you would invest  3,700  in Tenaris SA on December 11, 2024 and sell it today you would lose (280.00) from holding Tenaris SA or give up 7.57% of portfolio value over 90 days.

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

DISTRICT METALS  vs.  Tenaris SA

DISTRICT METALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DISTRICT METALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Tenaris SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tenaris SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with DISTRICT METALS and Tenaris SA

The main advantage of trading using opposite DISTRICT METALS and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DISTRICT METALS 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 DISTRICT METALS 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 Global Correlations module to find global opportunities by holding instruments from different markets.