Correlation Between Tenaris SA and Expro Group

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

Diversification Opportunities for Tenaris SA and Expro Group

-0.37

Correlation Coefficient

Tenaris SA  Expro Group

Very good diversification

The 3 months correlation between Tenaris and Expro is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Expro Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expro Group Holdings 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 Expro Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expro Group Holdings has no effect on the direction of Tenaris SA i.e., Tenaris SA and Expro Group go up and down completely randomly.

Pair Corralation between Tenaris SA and Expro Group

Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to under-perform the Expro Group. But the stock apears to be less risky and, when comparing its historical volatility, Tenaris SA ADR is 1.21 times less risky than Expro Group. The stock trades about -0.19 of its potential returns per unit of risk. The Expro Group Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,963  in Expro Group Holdings on March 3, 2024 and sell it today you would earn a total of  232.00  from holding Expro Group Holdings or generate 11.82% return on investment over 90 days.

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

Tenaris SA ADR  vs.  Expro Group Holdings

Tenaris SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenaris SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Expro Group Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Expro Group Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Expro Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenaris SA and Expro Group

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

The idea behind Tenaris SA ADR and Expro Group Holdings 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.