Correlation Between CHURCH and Tenaris SA

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

By analyzing existing cross correlation between CHURCH DWIGHT INC and Tenaris SA ADR, you can compare the effects of market volatilities on CHURCH and Tenaris SA 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 CHURCH with a short position of Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHURCH and Tenaris SA.

Diversification Opportunities for CHURCH and Tenaris SA

0.3

Correlation Coefficient

CHURCH  Tenaris SA

Weak diversification

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

Pair Corralation between CHURCH and Tenaris SA

Assuming the 90 days trading horizon CHURCH DWIGHT INC is expected to generate 1.47 times more return on investment than Tenaris SA. However, CHURCH is 1.47 times more volatile than Tenaris SA ADR. It trades about 0.07 of its potential returns per unit of risk. Tenaris SA ADR is currently generating about -0.03 per unit of risk. If you would invest  7,855  in CHURCH DWIGHT INC on October 12, 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	50.0%
Values	Daily Returns

CHURCH DWIGHT INC  vs.  Tenaris SA ADR

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 weak 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.

Tenaris SA ADR

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA ADR are ranked lower than 16 (%) 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.

Pair Trading with CHURCH and Tenaris SA

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

The idea behind CHURCH DWIGHT INC and Tenaris SA ADR 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.