Correlation Between Tenaris SA and Global E

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

Diversification Opportunities for Tenaris SA and Global E

0.87

Correlation Coefficient

Tenaris SA  Global E

Very poor diversification

The 3 months correlation between Tenaris and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Tenaris SA i.e., Tenaris SA and Global E go up and down completely randomly.

Pair Corralation between Tenaris SA and Global E

Allowing for the 90-day total investment horizon Tenaris SA is expected to generate 2.3 times less return on investment than Global E. But when comparing it to its historical volatility, Tenaris SA ADR is 1.45 times less risky than Global E. It trades about 0.17 of its potential returns per unit of risk. Global E Online is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  3,720  in Global E Online on October 1, 2024 and sell it today you would earn a total of  1,781  from holding Global E Online or generate 47.88% return on investment over 90 days.

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

Tenaris SA ADR  vs.  Global E Online

Tenaris SA ADR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Tenaris SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Global E Online

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenaris SA and Global E

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

The idea behind Tenaris SA ADR and Global E Online 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.