Correlation Between TIM Participacoes and T Mobile

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

Diversification Opportunities for TIM Participacoes and T Mobile

-0.66

Correlation Coefficient

TIM Participacoes  T Mobile

Excellent diversification

The 3 months correlation between TIM and TMUS is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding TIM Participacoes SA and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of TIM Participacoes i.e., TIM Participacoes and T Mobile go up and down completely randomly.

Pair Corralation between TIM Participacoes and T Mobile

Given the investment horizon of 90 days TIM Participacoes SA is expected to under-perform the T Mobile. In addition to that, TIM Participacoes is 1.23 times more volatile than T Mobile. It trades about -0.31 of its total potential returns per unit of risk. T Mobile is currently generating about 0.1 per unit of volatility. If you would invest  20,562  in T Mobile on September 28, 2024 and sell it today you would earn a total of  1,806  from holding T Mobile or generate 8.78% 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.  T Mobile

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.

T Mobile

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T Mobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TIM Participacoes and T Mobile

The main advantage of trading using opposite TIM Participacoes and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIM Participacoes position performs unexpectedly, T Mobile 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 T Mobile will offset losses from the drop in T Mobile's long position.

The idea behind TIM Participacoes SA and T Mobile 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.