Correlation Between TIM Participacoes and Orange SA

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

Diversification Opportunities for TIM Participacoes and Orange SA

0.0

Correlation Coefficient

TIM Participacoes  Orange SA

Pay attention - limited upside

The 3 months correlation between TIM and Orange is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TIM Participacoes SA and Orange SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA ADR 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 Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA ADR has no effect on the direction of TIM Participacoes i.e., TIM Participacoes and Orange SA go up and down completely randomly.

Pair Corralation between TIM Participacoes and Orange SA

If you would invest  1,780  in TIM Participacoes SA on April 9, 2025 and sell it today you would earn a total of  209.00  from holding TIM Participacoes SA or generate 11.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

TIM Participacoes SA  vs.  Orange SA ADR

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 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, TIM Participacoes sustained solid returns over the last few months and may actually be approaching a breakup point.

Orange SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orange SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Orange SA is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TIM Participacoes and Orange SA

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

The idea behind TIM Participacoes SA and Orange SA ADR 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.