Correlation Between TIM Participacoes and America Movil

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

Diversification Opportunities for TIM Participacoes and America Movil

0.83

Correlation Coefficient

TIM Participacoes  America Movil

Very poor diversification

The 3 months correlation between TIM and America is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding TIM Participacoes SA and America Movil SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Movil SAB 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 America Movil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Movil SAB has no effect on the direction of TIM Participacoes i.e., TIM Participacoes and America Movil go up and down completely randomly.

Pair Corralation between TIM Participacoes and America Movil

Given the investment horizon of 90 days TIM Participacoes is expected to generate 1.05 times less return on investment than America Movil. In addition to that, TIM Participacoes is 1.09 times more volatile than America Movil SAB. It trades about 0.48 of its total potential returns per unit of risk. America Movil SAB is currently generating about 0.55 per unit of volatility. If you would invest  1,342  in America Movil SAB on February 7, 2025 and sell it today you would earn a total of  344.00  from holding America Movil SAB or generate 25.63% return on investment over 90 days.

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

TIM Participacoes SA  vs.  America Movil SAB

TIM Participacoes

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TIM Participacoes SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, TIM Participacoes sustained solid returns over the last few months and may actually be approaching a breakup point.

America Movil SAB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in America Movil SAB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, America Movil showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TIM Participacoes and America Movil

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

The idea behind TIM Participacoes SA and America Movil SAB 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.