Correlation Between Tenaris SA and Safety Shot

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

Diversification Opportunities for Tenaris SA and Safety Shot

-0.01

Correlation Coefficient

Tenaris SA  Safety Shot

Good diversification

The 3 months correlation between Tenaris and Safety is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Tenaris SA i.e., Tenaris SA and Safety Shot go up and down completely randomly.

Pair Corralation between Tenaris SA and Safety Shot

Allowing for the 90-day total investment horizon Tenaris SA is expected to generate 18.74 times less return on investment than Safety Shot. But when comparing it to its historical volatility, Tenaris SA ADR is 16.81 times less risky than Safety Shot. It trades about 0.09 of its potential returns per unit of risk. Safety Shot is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Safety Shot on December 20, 2024 and sell it today you would lose (2.00) from holding Safety Shot or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Tenaris SA ADR  vs.  Safety Shot

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 6 (%) 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.

Safety Shot

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Shot are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Safety Shot showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenaris SA and Safety Shot

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

The idea behind Tenaris SA ADR and Safety Shot 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.