Correlation Between Tenaris SA and Pardee Resources

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

Diversification Opportunities for Tenaris SA and Pardee Resources

0.16

Correlation Coefficient

Tenaris SA  Pardee Resources

Average diversification

The 3 months correlation between Tenaris and Pardee is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Pardee Resources Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pardee Resources 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 Pardee Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pardee Resources has no effect on the direction of Tenaris SA i.e., Tenaris SA and Pardee Resources go up and down completely randomly.

Pair Corralation between Tenaris SA and Pardee Resources

Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to under-perform the Pardee Resources. But the stock apears to be less risky and, when comparing its historical volatility, Tenaris SA ADR is 1.17 times less risky than Pardee Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Pardee Resources Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  29,006  in Pardee Resources Co on December 2, 2024 and sell it today you would earn a total of  1,994  from holding Pardee Resources Co or generate 6.87% return on investment over 90 days.

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

Tenaris SA ADR  vs.  Pardee Resources Co

Tenaris SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tenaris SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tenaris SA is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pardee Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pardee Resources Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Pardee Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tenaris SA and Pardee Resources

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

The idea behind Tenaris SA ADR and Pardee Resources Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.