Correlation Between TIM SA and Livetech

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

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

Diversification Opportunities for TIM SA and Livetech

0.26

Correlation Coefficient

TIM SA  Livetech

Modest diversification

The 3 months correlation between TIM and Livetech is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding TIM SA and Livetech da Bahia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livetech da Bahia and TIM SA 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 SA are associated (or correlated) with Livetech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livetech da Bahia has no effect on the direction of TIM SA i.e., TIM SA and Livetech go up and down completely randomly.

Pair Corralation between TIM SA and Livetech

Assuming the 90 days trading horizon TIM SA is expected to generate 1.65 times less return on investment than Livetech. But when comparing it to its historical volatility, TIM SA is 2.8 times less risky than Livetech. It trades about 0.2 of its potential returns per unit of risk. Livetech da Bahia is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  224.00  in Livetech da Bahia on December 28, 2024 and sell it today you would earn a total of  79.00  from holding Livetech da Bahia or generate 35.27% return on investment over 90 days.

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

TIM SA  vs.  Livetech da Bahia

TIM SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TIM SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TIM SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Livetech da Bahia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Livetech da Bahia are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Livetech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TIM SA and Livetech

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

The idea behind TIM SA and Livetech da Bahia 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.