Correlation Between TIM Participacoes and Shenandoah Telecommunicatio

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

Diversification Opportunities for TIM Participacoes and Shenandoah Telecommunicatio

-0.44

Correlation Coefficient

TIM Participacoes  Shenandoah Telecommunicatio

Very good diversification

The 3 months correlation between TIM and Shenandoah is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding TIM Participacoes SA and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of TIM Participacoes i.e., TIM Participacoes and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between TIM Participacoes and Shenandoah Telecommunicatio

Given the investment horizon of 90 days TIM Participacoes SA is expected to generate 0.81 times more return on investment than Shenandoah Telecommunicatio. However, TIM Participacoes SA is 1.24 times less risky than Shenandoah Telecommunicatio. It trades about 0.21 of its potential returns per unit of risk. Shenandoah Telecommunications Co is currently generating about 0.02 per unit of risk. If you would invest  1,175  in TIM Participacoes SA on December 22, 2024 and sell it today you would earn a total of  335.00  from holding TIM Participacoes SA or generate 28.51% return on investment over 90 days.

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

TIM Participacoes SA  vs.  Shenandoah Telecommunications

TIM Participacoes

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TIM Participacoes SA are ranked lower than 16 (%) 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.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TIM Participacoes and Shenandoah Telecommunicatio

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

The idea behind TIM Participacoes SA and Shenandoah Telecommunications Co 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .