Correlation Between Tenaris SA and Aldel Financial

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

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

Diversification Opportunities for Tenaris SA and Aldel Financial

-0.37

Correlation Coefficient

Tenaris SA  Aldel Financial

Very good diversification

The 3 months correlation between Tenaris and Aldel is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II and Tenaris SA 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 Tenaris SA ADR are associated (or correlated) with Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of Tenaris SA i.e., Tenaris SA and Aldel Financial go up and down completely randomly.

Pair Corralation between Tenaris SA and Aldel Financial

Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 15.09 times more return on investment than Aldel Financial. However, Tenaris SA is 15.09 times more volatile than Aldel Financial II. It trades about 0.04 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.08 per unit of risk. If you would invest  3,240  in Tenaris SA ADR on September 23, 2024 and sell it today you would earn a total of  479.00  from holding Tenaris SA ADR or generate 14.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	16.3%
Values	Daily Returns

Tenaris SA ADR  vs.  Aldel Financial II

Tenaris SA ADR

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA ADR are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Tenaris SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aldel Financial II

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tenaris SA and Aldel Financial

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

The idea behind Tenaris SA ADR and Aldel Financial II 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.