Correlation Between TIM Participacoes and Disney

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

Diversification Opportunities for TIM Participacoes and Disney

-0.58

Correlation Coefficient

TIM Participacoes  Disney

Excellent diversification

The 3 months correlation between TIM and Disney is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding TIM Participacoes SA and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of TIM Participacoes i.e., TIM Participacoes and Disney go up and down completely randomly.

Pair Corralation between TIM Participacoes and Disney

Given the investment horizon of 90 days TIM Participacoes SA is expected to generate 1.56 times more return on investment than Disney. However, TIM Participacoes is 1.56 times more volatile than Walt Disney. It trades about 0.15 of its potential returns per unit of risk. Walt Disney is currently generating about -0.06 per unit of risk. If you would invest  2,025  in TIM Participacoes SA on August 13, 2025 and sell it today you would earn a total of  280.00  from holding TIM Participacoes SA or generate 13.83% return on investment over 90 days.

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

TIM Participacoes SA  vs.  Walt Disney

TIM Participacoes

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TIM Participacoes SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, TIM Participacoes sustained solid returns over the last few months and may actually be approaching a breakup point.

Walt Disney

Risk-Adjusted Performance

Weakest

Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Disney is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TIM Participacoes and Disney

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

The idea behind TIM Participacoes SA and Walt Disney 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.