Correlation Between Tenaris SA and Independence Contract

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

Diversification Opportunities for Tenaris SA and Independence Contract

-0.53

Correlation Coefficient

Tenaris SA  Independence Contract

Excellent diversification

The 3 months correlation between Tenaris and Independence is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Independence Contract Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Contract 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 Independence Contract. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Contract has no effect on the direction of Tenaris SA i.e., Tenaris SA and Independence Contract go up and down completely randomly.

Pair Corralation between Tenaris SA and Independence Contract

If you would invest  3,170  in Tenaris SA ADR on October 25, 2024 and sell it today you would earn a total of  681.00  from holding Tenaris SA ADR or generate 21.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.67%
Values	Daily Returns

Tenaris SA ADR  vs.  Independence Contract Drilling

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.

Independence Contract

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Independence Contract Drilling, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Independence Contract is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Tenaris SA and Independence Contract

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

The idea behind Tenaris SA ADR and Independence Contract Drilling, 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.