Correlation Between 49456BAV3 and Tenaris SA

Can any of the company-specific risk be diversified away by investing in both 49456BAV3 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 49456BAV3 and Tenaris SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KMI 48 01 FEB 33 and Tenaris SA ADR, you can compare the effects of market volatilities on 49456BAV3 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 49456BAV3 with a short position of Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of 49456BAV3 and Tenaris SA.

Diversification Opportunities for 49456BAV3 and Tenaris SA

-0.3

Correlation Coefficient

49456BAV3  Tenaris SA

Very good diversification

The 3 months correlation between 49456BAV3 and Tenaris is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding KMI 48 01 FEB 33 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 49456BAV3 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 KMI 48 01 FEB 33 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 49456BAV3 i.e., 49456BAV3 and Tenaris SA go up and down completely randomly.

Pair Corralation between 49456BAV3 and Tenaris SA

Assuming the 90 days trading horizon KMI 48 01 FEB 33 is expected to under-perform the Tenaris SA. But the bond apears to be less risky and, when comparing its historical volatility, KMI 48 01 FEB 33 is 1.14 times less risky than Tenaris SA. The bond trades about -0.28 of its potential returns per unit of risk. The Tenaris SA ADR is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  3,879  in Tenaris SA ADR on October 9, 2024 and sell it today you would lose (76.00) from holding Tenaris SA ADR or give up 1.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

KMI 48 01 FEB 33  vs.  Tenaris SA ADR

KMI 48 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KMI 48 01 FEB 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 49456BAV3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Tenaris SA ADR

Risk-Adjusted Performance

15 of 100

Good

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.

Pair Trading with 49456BAV3 and Tenaris SA

The main advantage of trading using opposite 49456BAV3 and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 49456BAV3 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 KMI 48 01 FEB 33 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.