Correlation Between TIM Participacoes and Ucloudlink

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

Diversification Opportunities for TIM Participacoes and Ucloudlink

0.85

Correlation Coefficient

TIM Participacoes  Ucloudlink

Very poor diversification

The 3 months correlation between TIM and Ucloudlink is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding TIM Participacoes SA and Ucloudlink Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ucloudlink Group 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 Ucloudlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ucloudlink Group has no effect on the direction of TIM Participacoes i.e., TIM Participacoes and Ucloudlink go up and down completely randomly.

Pair Corralation between TIM Participacoes and Ucloudlink

Given the investment horizon of 90 days TIM Participacoes is expected to generate 5.97 times less return on investment than Ucloudlink. But when comparing it to its historical volatility, TIM Participacoes SA is 2.87 times less risky than Ucloudlink. It trades about 0.14 of its potential returns per unit of risk. Ucloudlink Group is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  84.00  in Ucloudlink Group on April 22, 2025 and sell it today you would earn a total of  131.00  from holding Ucloudlink Group or generate 155.95% 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.  Ucloudlink Group

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.

Ucloudlink Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ucloudlink Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Ucloudlink disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TIM Participacoes and Ucloudlink

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

The idea behind TIM Participacoes SA and Ucloudlink Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.