Correlation Between Tenaris SA and Country Garden

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

Diversification Opportunities for Tenaris SA and Country Garden

0.09

Correlation Coefficient

Tenaris SA  Country Garden

Significant diversification

The 3 months correlation between Tenaris and Country is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Country Garden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Holdings 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 Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Holdings has no effect on the direction of Tenaris SA i.e., Tenaris SA and Country Garden go up and down completely randomly.

Pair Corralation between Tenaris SA and Country Garden

If you would invest  3,789  in Tenaris SA ADR on October 26, 2024 and sell it today you would earn a total of  79.00  from holding Tenaris SA ADR or generate 2.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	83.33%
Values	Daily Returns

Tenaris SA ADR  vs.  Country Garden Holdings

Tenaris SA ADR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA ADR are ranked lower than 16 (%) 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.

Country Garden Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Country Garden Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Country Garden may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tenaris SA and Country Garden

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

The idea behind Tenaris SA ADR and Country Garden Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.