Correlation Between Tenaris SA and Worley Parsons

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

Diversification Opportunities for Tenaris SA and Worley Parsons

0.22

Correlation Coefficient

Tenaris SA  Worley Parsons

Modest diversification

The 3 months correlation between Tenaris and Worley is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Worley Parsons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worley Parsons 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 Worley Parsons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worley Parsons has no effect on the direction of Tenaris SA i.e., Tenaris SA and Worley Parsons go up and down completely randomly.

Pair Corralation between Tenaris SA and Worley Parsons

Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to under-perform the Worley Parsons. But the stock apears to be less risky and, when comparing its historical volatility, Tenaris SA ADR is 2.42 times less risky than Worley Parsons. The stock trades about -0.14 of its potential returns per unit of risk. The Worley Parsons is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  890.00  in Worley Parsons on December 4, 2024 and sell it today you would earn a total of  68.00  from holding Worley Parsons or generate 7.64% return on investment over 90 days.

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

Tenaris SA ADR  vs.  Worley Parsons

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 latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Worley Parsons

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Worley Parsons are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Worley Parsons showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenaris SA and Worley Parsons

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

The idea behind Tenaris SA ADR and Worley Parsons 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.