Correlation Between Saipem SpA and Worley

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

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

Diversification Opportunities for Saipem SpA and Worley

-0.76

Correlation Coefficient

Saipem SpA  Worley

Pay attention - limited upside

The 3 months correlation between Saipem and Worley is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Saipem SpA and Worley Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worley Limited and Saipem SpA 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 Saipem SpA are associated (or correlated) with Worley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worley Limited has no effect on the direction of Saipem SpA i.e., Saipem SpA and Worley go up and down completely randomly.

Pair Corralation between Saipem SpA and Worley

Assuming the 90 days horizon Saipem SpA is expected to under-perform the Worley. In addition to that, Saipem SpA is 1.98 times more volatile than Worley Limited. It trades about -0.04 of its total potential returns per unit of risk. Worley Limited is currently generating about 0.1 per unit of volatility. If you would invest  871.00  in Worley Limited on December 29, 2024 and sell it today you would earn a total of  70.00  from holding Worley Limited or generate 8.04% return on investment over 90 days.

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

Saipem SpA  vs.  Worley Limited

Saipem SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saipem SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Saipem SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Worley Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Worley Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Worley may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Saipem SpA and Worley

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

The idea behind Saipem SpA and Worley Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.