Correlation Between Tenaris SA and Neuronetics

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

Diversification Opportunities for Tenaris SA and Neuronetics

0.11

Correlation Coefficient

Tenaris SA  Neuronetics

Average diversification

The 3 months correlation between Tenaris and Neuronetics is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Neuronetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuronetics 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 Neuronetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuronetics has no effect on the direction of Tenaris SA i.e., Tenaris SA and Neuronetics go up and down completely randomly.

Pair Corralation between Tenaris SA and Neuronetics

Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to under-perform the Neuronetics. But the stock apears to be less risky and, when comparing its historical volatility, Tenaris SA ADR is 2.3 times less risky than Neuronetics. The stock trades about -0.07 of its potential returns per unit of risk. The Neuronetics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  426.00  in Neuronetics on January 31, 2025 and sell it today you would earn a total of  20.00  from holding Neuronetics or generate 4.69% return on investment over 90 days.

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

Tenaris SA ADR  vs.  Neuronetics

Tenaris SA ADR

Risk-Adjusted Performance

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 latest inconsistent 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.

Neuronetics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neuronetics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Neuronetics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenaris SA and Neuronetics

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

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