Correlation Between Companhia Brasileira and TIM SA
Can any of the company-specific risk be diversified away by investing in both Companhia Brasileira 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 Companhia Brasileira and TIM SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Brasileira de and TIM SA, you can compare the effects of market volatilities on Companhia Brasileira 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 Companhia Brasileira with a short position of TIM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Brasileira and TIM SA.
Diversification Opportunities for Companhia Brasileira and TIM SA
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Companhia and TIM is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Brasileira de and TIM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIM SA and Companhia Brasileira 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 Companhia Brasileira de 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 Companhia Brasileira i.e., Companhia Brasileira and TIM SA go up and down completely randomly.
Pair Corralation between Companhia Brasileira and TIM SA
Assuming the 90 days trading horizon Companhia Brasileira de is expected to generate 1.65 times more return on investment than TIM SA. However, Companhia Brasileira is 1.65 times more volatile than TIM SA. It trades about -0.01 of its potential returns per unit of risk. TIM SA is currently generating about -0.19 per unit of risk. If you would invest 282.00 in Companhia Brasileira de on August 30, 2024 and sell it today you would lose (8.00) from holding Companhia Brasileira de or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Brasileira de vs. TIM SA
Performance |
| Timeline |
| Companhia Brasileira |
| TIM SA |
Companhia Brasileira and TIM SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Brasileira and TIM SA
The main advantage of trading using opposite Companhia Brasileira and TIM SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Brasileira 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.| Companhia Brasileira vs. Atacado SA | Companhia Brasileira vs. Sendas Distribuidora SA | Companhia Brasileira vs. Natura Co Holding | Companhia Brasileira vs. Lojas Renner SA |
| TIM SA vs. Telefnica Brasil SA | TIM SA vs. Companhia Brasileira de | TIM SA vs. Natura Co Holding | TIM SA vs. Yduqs Participaes SA |
Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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