Correlation Between Tenaris SA and XCHG Limited

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

Diversification Opportunities for Tenaris SA and XCHG Limited

0.16

Correlation Coefficient

Tenaris SA  XCHG Limited

Average diversification

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

Pair Corralation between Tenaris SA and XCHG Limited

Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 0.12 times more return on investment than XCHG Limited. However, Tenaris SA ADR is 8.23 times less risky than XCHG Limited. It trades about 0.03 of its potential returns per unit of risk. XCHG Limited American is currently generating about -0.16 per unit of risk. If you would invest  3,813  in Tenaris SA ADR on December 17, 2024 and sell it today you would earn a total of  65.00  from holding Tenaris SA ADR or generate 1.7% 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.  XCHG Limited American

Tenaris SA ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

XCHG Limited American

Risk-Adjusted Performance

Very Weak

Over the last 90 days XCHG Limited American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Tenaris SA and XCHG Limited

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

The idea behind Tenaris SA ADR and XCHG Limited American 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.