Correlation Between Rogers Communications and TIM Participacoes

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

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

Diversification Opportunities for Rogers Communications and TIM Participacoes

0.93

Correlation Coefficient

Rogers Communications  TIM Participacoes

Almost no diversification

The 3 months correlation between Rogers and TIM is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications and TIM Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIM Participacoes and Rogers Communications 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 Rogers Communications are associated (or correlated) with TIM Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIM Participacoes has no effect on the direction of Rogers Communications i.e., Rogers Communications and TIM Participacoes go up and down completely randomly.

Pair Corralation between Rogers Communications and TIM Participacoes

Considering the 90-day investment horizon Rogers Communications is expected to under-perform the TIM Participacoes. But the stock apears to be less risky and, when comparing its historical volatility, Rogers Communications is 1.35 times less risky than TIM Participacoes. The stock trades about -0.51 of its potential returns per unit of risk. The TIM Participacoes SA is currently generating about -0.31 of returns per unit of risk over similar time horizon. If you would invest  1,313  in TIM Participacoes SA on October 6, 2024 and sell it today you would lose (152.00) from holding TIM Participacoes SA or give up 11.58% of portfolio value over 90 days.

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

Rogers Communications  vs.  TIM Participacoes SA

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

TIM Participacoes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TIM Participacoes SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Rogers Communications and TIM Participacoes

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

The idea behind Rogers Communications and TIM Participacoes 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.