Correlation Between Texas Gulf and Saipem SpA

Can any of the company-specific risk be diversified away by investing in both Texas Gulf and Saipem SpA 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 Texas Gulf and Saipem SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Texas Gulf Energy and Saipem SpA, you can compare the effects of market volatilities on Texas Gulf and Saipem SpA 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 Texas Gulf with a short position of Saipem SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Gulf and Saipem SpA.

Diversification Opportunities for Texas Gulf and Saipem SpA

-0.49

Correlation Coefficient

Texas Gulf  Saipem SpA

Very good diversification

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

Pair Corralation between Texas Gulf and Saipem SpA

Given the investment horizon of 90 days Texas Gulf Energy is expected to under-perform the Saipem SpA. In addition to that, Texas Gulf is 1.83 times more volatile than Saipem SpA. It trades about -0.06 of its total potential returns per unit of risk. Saipem SpA is currently generating about 0.22 per unit of volatility. If you would invest  245.00  in Saipem SpA on September 27, 2024 and sell it today you would earn a total of  11.00  from holding Saipem SpA or generate 4.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Texas Gulf Energy  vs.  Saipem SpA

Texas Gulf Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Texas Gulf Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Texas Gulf is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Saipem SpA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saipem SpA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent primary indicators, Saipem SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Texas Gulf and Saipem SpA

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

The idea behind Texas Gulf Energy and Saipem SpA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.