Correlation Between TIM Participacoes and Ooma

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

Diversification Opportunities for TIM Participacoes and Ooma

-0.84

Correlation Coefficient

TIM Participacoes  Ooma

Pay attention - limited upside

The 3 months correlation between TIM and Ooma is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding TIM Participacoes SA and Ooma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ooma Inc 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 Ooma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ooma Inc has no effect on the direction of TIM Participacoes i.e., TIM Participacoes and Ooma go up and down completely randomly.

Pair Corralation between TIM Participacoes and Ooma

Given the investment horizon of 90 days TIM Participacoes SA is expected to under-perform the Ooma. But the stock apears to be less risky and, when comparing its historical volatility, TIM Participacoes SA is 1.06 times less risky than Ooma. The stock trades about -0.18 of its potential returns per unit of risk. The Ooma Inc is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,059  in Ooma Inc on September 2, 2024 and sell it today you would earn a total of  421.00  from holding Ooma Inc or generate 39.75% return on investment over 90 days.

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

TIM Participacoes SA  vs.  Ooma Inc

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ooma Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ooma Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Ooma sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TIM Participacoes and Ooma

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

The idea behind TIM Participacoes SA and Ooma Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.