Correlation Between Tenaris SA and Delek Energy

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

Diversification Opportunities for Tenaris SA and Delek Energy

0.34

Correlation Coefficient

Tenaris SA  Delek Energy

Weak diversification

The 3 months correlation between Tenaris and Delek is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Delek Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Energy 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 Delek Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Energy has no effect on the direction of Tenaris SA i.e., Tenaris SA and Delek Energy go up and down completely randomly.

Pair Corralation between Tenaris SA and Delek Energy

Allowing for the 90-day total investment horizon Tenaris SA is expected to generate 6.94 times less return on investment than Delek Energy. But when comparing it to its historical volatility, Tenaris SA ADR is 3.08 times less risky than Delek Energy. It trades about 0.21 of its potential returns per unit of risk. Delek Energy is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  1,328  in Delek Energy on March 2, 2025 and sell it today you would earn a total of  597.00  from holding Delek Energy or generate 44.95% return on investment over 90 days.

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

Tenaris SA ADR  vs.  Delek Energy

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 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.

Delek Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Delek Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenaris SA and Delek Energy

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

The idea behind Tenaris SA ADR and Delek Energy 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.