Correlation Between Yduqs Participaes and TIM SA

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

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

Diversification Opportunities for Yduqs Participaes and TIM SA

0.87

Correlation Coefficient

Yduqs Participaes  TIM SA

Very poor diversification

The 3 months correlation between Yduqs and TIM is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Yduqs Participaes SA and TIM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIM SA and Yduqs Participaes 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 Yduqs Participaes SA are associated (or correlated) with TIM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIM SA has no effect on the direction of Yduqs Participaes i.e., Yduqs Participaes and TIM SA go up and down completely randomly.

Pair Corralation between Yduqs Participaes and TIM SA

Assuming the 90 days trading horizon Yduqs Participaes SA is expected to generate 1.85 times more return on investment than TIM SA. However, Yduqs Participaes is 1.85 times more volatile than TIM SA. It trades about 0.18 of its potential returns per unit of risk. TIM SA is currently generating about 0.2 per unit of risk. If you would invest  855.00  in Yduqs Participaes SA on December 30, 2024 and sell it today you would earn a total of  361.00  from holding Yduqs Participaes SA or generate 42.22% return on investment over 90 days.

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

Yduqs Participaes SA  vs.  TIM SA

Yduqs Participaes

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yduqs Participaes SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Yduqs Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Yduqs Participaes and TIM SA

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

The idea behind Yduqs Participaes SA and TIM SA 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.