Correlation Between Tenaris SA and Archrock

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

Diversification Opportunities for Tenaris SA and Archrock

0.62

Correlation Coefficient

Tenaris SA  Archrock

Poor diversification

The 3 months correlation between Tenaris and Archrock is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock 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 Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of Tenaris SA i.e., Tenaris SA and Archrock go up and down completely randomly.

Pair Corralation between Tenaris SA and Archrock

Allowing for the 90-day total investment horizon Tenaris SA is expected to generate 1.65 times less return on investment than Archrock. But when comparing it to its historical volatility, Tenaris SA ADR is 1.83 times less risky than Archrock. It trades about 0.07 of its potential returns per unit of risk. Archrock is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,436  in Archrock on December 21, 2024 and sell it today you would earn a total of  233.00  from holding Archrock or generate 9.56% return on investment over 90 days.

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

Tenaris SA ADR  vs.  Archrock

Tenaris SA ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Tenaris SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Archrock

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Archrock are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Archrock may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tenaris SA and Archrock

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

The idea behind Tenaris SA ADR and Archrock 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..