Correlation Between T Mobile and Oi SA

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

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

Diversification Opportunities for T Mobile and Oi SA

-0.88

Correlation Coefficient

T Mobile  Oi SA

Pay attention - limited upside

The 3 months correlation between T1MU34 and OIBR3 is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Oi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oi SA and T Mobile 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 T Mobile are associated (or correlated) with Oi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oi SA has no effect on the direction of T Mobile i.e., T Mobile and Oi SA go up and down completely randomly.

Pair Corralation between T Mobile and Oi SA

Assuming the 90 days trading horizon T Mobile is expected to generate 0.11 times more return on investment than Oi SA. However, T Mobile is 9.16 times less risky than Oi SA. It trades about 0.25 of its potential returns per unit of risk. Oi SA is currently generating about -0.08 per unit of risk. If you would invest  56,354  in T Mobile on September 13, 2024 and sell it today you would earn a total of  13,836  from holding T Mobile or generate 24.55% return on investment over 90 days.

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

T Mobile  vs.  Oi SA

T Mobile

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, T Mobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Oi SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oi 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with T Mobile and Oi SA

The main advantage of trading using opposite T Mobile and Oi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Mobile position performs unexpectedly, Oi 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 Oi SA will offset losses from the drop in Oi SA's long position.

The idea behind T Mobile and Oi 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 Transaction History module to view history of all your transactions and understand their impact on performance.