Correlation Between Ultrapar Participacoes and China Oil
Can any of the company-specific risk be diversified away by investing in both Ultrapar Participacoes and China Oil 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 China Oil 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 China Oil And, you can compare the effects of market volatilities on Ultrapar Participacoes and China Oil 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 China Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrapar Participacoes and China Oil.
Diversification Opportunities for Ultrapar Participacoes and China Oil
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ultrapar and China is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ultrapar Participacoes SA and China Oil And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Oil And 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 China Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Oil And has no effect on the direction of Ultrapar Participacoes i.e., Ultrapar Participacoes and China Oil go up and down completely randomly.
Pair Corralation between Ultrapar Participacoes and China Oil
Considering the 90-day investment horizon Ultrapar Participacoes is expected to generate 4.46 times less return on investment than China Oil. But when comparing it to its historical volatility, Ultrapar Participacoes SA is 4.95 times less risky than China Oil. It trades about 0.04 of its potential returns per unit of risk. China Oil And is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3.00 in China Oil And on September 5, 2024 and sell it today you would lose (1.00) from holding China Oil And or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ultrapar Participacoes SA vs. China Oil And
Performance |
| Timeline |
| Ultrapar Participacoes |
| China Oil And |
Ultrapar Participacoes and China Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultrapar Participacoes and China Oil
The main advantage of trading using opposite Ultrapar Participacoes and China Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrapar Participacoes position performs unexpectedly, China Oil 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 China Oil will offset losses from the drop in China Oil's long position.| Ultrapar Participacoes vs. CVR Energy | Ultrapar Participacoes vs. PBF Energy | Ultrapar Participacoes vs. HF Sinclair Corp | Ultrapar Participacoes vs. Par Pacific Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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