Correlation Between Tenaris SA and Lizhi

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

Diversification Opportunities for Tenaris SA and Lizhi

-0.49

Correlation Coefficient

Tenaris SA  Lizhi

Very good diversification

The 3 months correlation between Tenaris and Lizhi is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Lizhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhi Inc 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 Lizhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lizhi Inc has no effect on the direction of Tenaris SA i.e., Tenaris SA and Lizhi go up and down completely randomly.

Pair Corralation between Tenaris SA and Lizhi

Allowing for the 90-day total investment horizon Tenaris SA is expected to generate 3.23 times less return on investment than Lizhi. But when comparing it to its historical volatility, Tenaris SA ADR is 3.34 times less risky than Lizhi. It trades about 0.07 of its potential returns per unit of risk. Lizhi Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  194.00  in Lizhi Inc on December 19, 2024 and sell it today you would earn a total of  29.00  from holding Lizhi Inc or generate 14.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tenaris SA ADR  vs.  Lizhi Inc

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 5 (%) 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.

Lizhi Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lizhi Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Lizhi reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenaris SA and Lizhi

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

The idea behind Tenaris SA ADR and Lizhi Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.