Correlation Between TIM Participacoes and Consolidated Communications

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

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

Diversification Opportunities for TIM Participacoes and Consolidated Communications

-0.73

Correlation Coefficient

TIM Participacoes  Consolidated Communications

Pay attention - limited upside

The 3 months correlation between TIM and Consolidated is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding TIM Participacoes SA and Consolidated Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications and TIM Participacoes 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 TIM Participacoes SA are associated (or correlated) with Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of TIM Participacoes i.e., TIM Participacoes and Consolidated Communications go up and down completely randomly.

Pair Corralation between TIM Participacoes and Consolidated Communications

Given the investment horizon of 90 days TIM Participacoes SA is expected to under-perform the Consolidated Communications. In addition to that, TIM Participacoes is 7.13 times more volatile than Consolidated Communications. It trades about -0.31 of its total potential returns per unit of risk. Consolidated Communications is currently generating about 0.11 per unit of volatility. If you would invest  464.00  in Consolidated Communications on September 28, 2024 and sell it today you would earn a total of  8.00  from holding Consolidated Communications or generate 1.72% return on investment over 90 days.

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

TIM Participacoes SA  vs.  Consolidated Communications

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 conflicting performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Consolidated Communications

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Consolidated Communications is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with TIM Participacoes and Consolidated Communications

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

The idea behind TIM Participacoes SA and Consolidated Communications 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.