Correlation Between Telia Company and TIM Participacoes
Can any of the company-specific risk be diversified away by investing in both Telia Company and TIM Participacoes 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 Telia Company and TIM Participacoes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telia Company AB and TIM Participacoes SA, you can compare the effects of market volatilities on Telia Company and TIM Participacoes 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 Telia Company with a short position of TIM Participacoes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and TIM Participacoes.
Diversification Opportunities for Telia Company and TIM Participacoes
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telia and TIM is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and TIM Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIM Participacoes and Telia Company 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 Telia Company AB are associated (or correlated) with TIM Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIM Participacoes has no effect on the direction of Telia Company i.e., Telia Company and TIM Participacoes go up and down completely randomly.
Pair Corralation between Telia Company and TIM Participacoes
If you would invest 1,184 in TIM Participacoes SA on November 3, 2024 and sell it today you would earn a total of 140.00 from holding TIM Participacoes SA or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Telia Company AB vs. TIM Participacoes SA
Performance |
| Timeline |
| Telia Company |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| TIM Participacoes |
Telia Company and TIM Participacoes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telia Company and TIM Participacoes
The main advantage of trading using opposite Telia Company and TIM Participacoes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telia Company position performs unexpectedly, TIM Participacoes 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 Participacoes will offset losses from the drop in TIM Participacoes' long position.| Telia Company vs. MTN Group Ltd | Telia Company vs. Vodacom Group Ltd | Telia Company vs. Telenor ASA ADR | Telia Company vs. WideOpenWest |
| TIM Participacoes vs. SK Telecom Co | TIM Participacoes vs. PLDT Inc ADR | TIM Participacoes vs. Liberty Broadband Srs | TIM Participacoes vs. Liberty Broadband Srs |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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