Correlation Between TIM Participacoes and Lict

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

Diversification Opportunities for TIM Participacoes and Lict

0.0

Correlation Coefficient

TIM Participacoes  Lict

Pay attention - limited upside

The 3 months correlation between TIM and Lict is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TIM Participacoes SA and Lict Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lict 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 Lict. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lict has no effect on the direction of TIM Participacoes i.e., TIM Participacoes and Lict go up and down completely randomly.

Pair Corralation between TIM Participacoes and Lict

If you would invest  1,204  in TIM Participacoes SA on December 17, 2024 and sell it today you would earn a total of  295.00  from holding TIM Participacoes SA or generate 24.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

TIM Participacoes SA  vs.  Lict Corp.

TIM Participacoes

Risk-Adjusted Performance

Good

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

Lict

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lict Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Lict is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TIM Participacoes and Lict

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

The idea behind TIM Participacoes SA and Lict Corporation 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.