Correlation Between TIM SA and Telefnica

Can any of the company-specific risk be diversified away by investing in both TIM SA and Telefnica 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 SA and Telefnica into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TIM SA and Telefnica SA, you can compare the effects of market volatilities on TIM SA and Telefnica 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 SA with a short position of Telefnica. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIM SA and Telefnica.

Diversification Opportunities for TIM SA and Telefnica

-0.26

Correlation Coefficient

TIM SA  Telefnica

Very good diversification

The 3 months correlation between TIM and Telefnica is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding TIM SA and Telefnica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica SA and TIM SA 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 SA are associated (or correlated) with Telefnica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica SA has no effect on the direction of TIM SA i.e., TIM SA and Telefnica go up and down completely randomly.

Pair Corralation between TIM SA and Telefnica

Assuming the 90 days trading horizon TIM SA is expected to under-perform the Telefnica. In addition to that, TIM SA is 8.69 times more volatile than Telefnica SA. It trades about -0.11 of its total potential returns per unit of risk. Telefnica SA is currently generating about 0.08 per unit of volatility. If you would invest  2,754  in Telefnica SA on April 23, 2025 and sell it today you would earn a total of  188.00  from holding Telefnica SA or generate 6.83% return on investment over 90 days.

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

TIM SA  vs.  Telefnica SA

TIM SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days TIM SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Telefnica SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Telefnica SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Telefnica may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with TIM SA and Telefnica

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

The idea behind TIM SA and Telefnica SA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.