Correlation Between TIM SA and Telefnica Brasil

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

Diversification Opportunities for TIM SA and Telefnica Brasil

-0.64

Correlation Coefficient

TIM SA  Telefnica Brasil

Excellent diversification

The 3 months correlation between TIM and Telefnica is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding TIM SA and Telefnica Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica Brasil 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 Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica Brasil has no effect on the direction of TIM SA i.e., TIM SA and Telefnica Brasil go up and down completely randomly.

Pair Corralation between TIM SA and Telefnica Brasil

Assuming the 90 days trading horizon TIM SA is expected to under-perform the Telefnica Brasil. In addition to that, TIM SA is 9.62 times more volatile than Telefnica Brasil SA. It trades about -0.11 of its total potential returns per unit of risk. Telefnica Brasil SA is currently generating about 0.19 per unit of volatility. If you would invest  2,669  in Telefnica Brasil SA on April 23, 2025 and sell it today you would earn a total of  431.00  from holding Telefnica Brasil SA or generate 16.15% return on investment over 90 days.

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

TIM SA  vs.  Telefnica Brasil 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 Brasil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telefnica Brasil SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Telefnica Brasil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TIM SA and Telefnica Brasil

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

The idea behind TIM SA and Telefnica Brasil 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.