Correlation Between Tenaris SA and World Kinect

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

Diversification Opportunities for Tenaris SA and World Kinect

0.85

Correlation Coefficient

Tenaris SA  World Kinect

Very poor diversification

The 3 months correlation between Tenaris and World is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and World Kinect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Kinect 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 World Kinect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Kinect has no effect on the direction of Tenaris SA i.e., Tenaris SA and World Kinect go up and down completely randomly.

Pair Corralation between Tenaris SA and World Kinect

Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 1.17 times more return on investment than World Kinect. However, Tenaris SA is 1.17 times more volatile than World Kinect. It trades about 0.07 of its potential returns per unit of risk. World Kinect is currently generating about -0.02 per unit of risk. If you would invest  3,233  in Tenaris SA ADR on May 5, 2025 and sell it today you would earn a total of  233.00  from holding Tenaris SA ADR or generate 7.21% return on investment over 90 days.

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

Tenaris SA ADR  vs.  World Kinect

Tenaris SA ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Tenaris SA may actually be approaching a critical reversion point that can send shares even higher in September 2025.

World Kinect

Risk-Adjusted Performance

Very Weak

Over the last 90 days World Kinect has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, World Kinect is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tenaris SA and World Kinect

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

The idea behind Tenaris SA ADR and World Kinect 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 Correlations module to find global opportunities by holding instruments from different markets.