Correlation Between Safe and Tenaris SA

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

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

Diversification Opportunities for Safe and Tenaris SA

-0.27

Correlation Coefficient

Safe  Tenaris SA

Very good diversification

The 3 months correlation between Safe and Tenaris is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Safe and Green and Tenaris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA and Safe 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 Safe and Green 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 Safe i.e., Safe and Tenaris SA go up and down completely randomly.

Pair Corralation between Safe and Tenaris SA

Considering the 90-day investment horizon Safe and Green is expected to under-perform the Tenaris SA. In addition to that, Safe is 4.22 times more volatile than Tenaris SA. It trades about -0.12 of its total potential returns per unit of risk. Tenaris SA is currently generating about 0.06 per unit of volatility. If you would invest  1,881  in Tenaris SA on December 29, 2024 and sell it today you would earn a total of  108.00  from holding Tenaris SA or generate 5.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Safe and Green  vs.  Tenaris SA

Safe and Green

Risk-Adjusted Performance

Very Weak

Over the last 90 days Safe and Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Tenaris SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tenaris SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Safe and Tenaris SA

The main advantage of trading using opposite Safe and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe 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 Safe and Green 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.