Correlation Between Tenaris SA and Eidesvik Offshore

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

By analyzing existing cross correlation between Tenaris SA and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Tenaris SA and Eidesvik Offshore 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 Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Eidesvik Offshore.

Diversification Opportunities for Tenaris SA and Eidesvik Offshore

-0.75

Correlation Coefficient

Tenaris SA  Eidesvik Offshore

Pay attention - limited upside

The 3 months correlation between Tenaris and Eidesvik is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 are associated (or correlated) with Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of Tenaris SA i.e., Tenaris SA and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between Tenaris SA and Eidesvik Offshore

Assuming the 90 days horizon Tenaris SA is expected to generate 0.8 times more return on investment than Eidesvik Offshore. However, Tenaris SA is 1.24 times less risky than Eidesvik Offshore. It trades about 0.33 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about -0.08 per unit of risk. If you would invest  2,501  in Tenaris SA on September 13, 2024 and sell it today you would earn a total of  1,099  from holding Tenaris SA or generate 43.94% return on investment over 90 days.

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

Tenaris SA  vs.  Eidesvik Offshore ASA

Tenaris SA

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tenaris SA reported solid returns over the last few months and may actually be approaching a breakup point.

Eidesvik Offshore ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eidesvik Offshore ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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.

Pair Trading with Tenaris SA and Eidesvik Offshore

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

The idea behind Tenaris SA and Eidesvik Offshore ASA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.