Correlation Between Saipem SpA and Worley Parsons

Can any of the company-specific risk be diversified away by investing in both Saipem SpA and Worley Parsons 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 Parsons 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 Parsons, you can compare the effects of market volatilities on Saipem SpA and Worley Parsons 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 Parsons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saipem SpA and Worley Parsons.

Diversification Opportunities for Saipem SpA and Worley Parsons

-0.27

Correlation Coefficient

Saipem SpA  Worley Parsons

Very good diversification

The 3 months correlation between Saipem and Worley is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Saipem SpA and Worley Parsons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worley Parsons 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 Parsons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worley Parsons has no effect on the direction of Saipem SpA i.e., Saipem SpA and Worley Parsons go up and down completely randomly.

Pair Corralation between Saipem SpA and Worley Parsons

Assuming the 90 days horizon Saipem SpA is expected to under-perform the Worley Parsons. But the pink sheet apears to be less risky and, when comparing its historical volatility, Saipem SpA is 2.18 times less risky than Worley Parsons. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Worley Parsons is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  900.00  in Worley Parsons on December 4, 2024 and sell it today you would earn a total of  111.00  from holding Worley Parsons or generate 12.33% return on investment over 90 days.

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

Saipem SpA  vs.  Worley Parsons

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 Parsons

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Worley Parsons are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Worley Parsons showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saipem SpA and Worley Parsons

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

The idea behind Saipem SpA and Worley Parsons 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.