Correlation Between Ultrapar Participacoes and Adams Resources
Can any of the company-specific risk be diversified away by investing in both Ultrapar Participacoes and Adams Resources 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 Ultrapar Participacoes and Adams Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultrapar Participacoes SA and Adams Resources Energy, you can compare the effects of market volatilities on Ultrapar Participacoes and Adams Resources 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 Ultrapar Participacoes with a short position of Adams Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrapar Participacoes and Adams Resources.
Diversification Opportunities for Ultrapar Participacoes and Adams Resources
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ultrapar and Adams is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ultrapar Participacoes SA and Adams Resources Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Resources Energy and Ultrapar 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 Ultrapar Participacoes SA are associated (or correlated) with Adams Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Resources Energy has no effect on the direction of Ultrapar Participacoes i.e., Ultrapar Participacoes and Adams Resources go up and down completely randomly.
Pair Corralation between Ultrapar Participacoes and Adams Resources
Considering the 90-day investment horizon Ultrapar Participacoes SA is expected to generate 0.77 times more return on investment than Adams Resources. However, Ultrapar Participacoes SA is 1.29 times less risky than Adams Resources. It trades about 0.03 of its potential returns per unit of risk. Adams Resources Energy is currently generating about 0.02 per unit of risk. If you would invest 246.00 in Ultrapar Participacoes SA on August 27, 2024 and sell it today you would earn a total of 72.00 from holding Ultrapar Participacoes SA or generate 29.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultrapar Participacoes SA vs. Adams Resources Energy
Performance |
| Timeline |
| Ultrapar Participacoes |
| Adams Resources Energy |
Ultrapar Participacoes and Adams Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultrapar Participacoes and Adams Resources
The main advantage of trading using opposite Ultrapar Participacoes and Adams Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrapar Participacoes position performs unexpectedly, Adams Resources 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 Adams Resources will offset losses from the drop in Adams Resources' long position.| Ultrapar Participacoes vs. Star Gas Partners | Ultrapar Participacoes vs. Par Pacific Holdings | Ultrapar Participacoes vs. Delek Energy | Ultrapar Participacoes vs. Crossamerica Partners LP |
| Adams Resources vs. Delek Energy | Adams Resources vs. Crossamerica Partners LP | Adams Resources vs. Valvoline | Adams Resources vs. Star Gas Partners |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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