Correlation Between ATT and TIM SA

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

By analyzing existing cross correlation between ATT Inc and TIM SA, you can compare the effects of market volatilities on ATT and TIM SA 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 ATT with a short position of TIM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and TIM SA.

Diversification Opportunities for ATT and TIM SA

-0.88

Correlation Coefficient

ATT  TIM SA

Pay attention - limited upside

The 3 months correlation between ATT and TIM is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and TIM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIM SA and ATT 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 ATT Inc are associated (or correlated) with TIM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIM SA has no effect on the direction of ATT i.e., ATT and TIM SA go up and down completely randomly.

Pair Corralation between ATT and TIM SA

Assuming the 90 days trading horizon ATT Inc is expected to generate 1.1 times more return on investment than TIM SA. However, ATT is 1.1 times more volatile than TIM SA. It trades about 0.07 of its potential returns per unit of risk. TIM SA is currently generating about -0.21 per unit of risk. If you would invest  4,501  in ATT Inc on September 23, 2024 and sell it today you would earn a total of  114.00  from holding ATT Inc or generate 2.53% return on investment over 90 days.

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

ATT Inc  vs.  TIM SA

ATT Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ATT sustained solid returns over the last few months and may actually be approaching a breakup point.

TIM SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TIM SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ATT and TIM SA

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

The idea behind ATT Inc and TIM SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.