Correlation Between Tenaris SA and CHURCH

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

Diversification Opportunities for Tenaris SA and CHURCH

0.3

Correlation Coefficient

Tenaris SA  CHURCH

Weak diversification

The 3 months correlation between Tenaris and CHURCH is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and CHURCH DWIGHT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHURCH DWIGHT 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 CHURCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHURCH DWIGHT INC has no effect on the direction of Tenaris SA i.e., Tenaris SA and CHURCH go up and down completely randomly.

Pair Corralation between Tenaris SA and CHURCH

Allowing for the 90-day total investment horizon Tenaris SA is expected to generate 2.72 times less return on investment than CHURCH. But when comparing it to its historical volatility, Tenaris SA ADR is 1.43 times less risky than CHURCH. It trades about 0.04 of its potential returns per unit of risk. CHURCH DWIGHT INC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,855  in CHURCH DWIGHT INC on October 11, 2024 and sell it today you would earn a total of  80.00  from holding CHURCH DWIGHT INC or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	47.62%
Values	Daily Returns

Tenaris SA ADR  vs.  CHURCH DWIGHT INC

Tenaris SA ADR

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA ADR are ranked lower than 15 (%) 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.

CHURCH DWIGHT INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHURCH DWIGHT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CHURCH DWIGHT INC investors.

Pair Trading with Tenaris SA and CHURCH

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

The idea behind Tenaris SA ADR and CHURCH DWIGHT 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.