Correlation Between Delek Logistics and Ultrapar Participacoes

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

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

Diversification Opportunities for Delek Logistics and Ultrapar Participacoes

0.4

Correlation Coefficient

Delek Logistics  Ultrapar Participacoes

Very weak diversification

The 3 months correlation between Delek and Ultrapar is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Ultrapar Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrapar Participacoes and Delek Logistics 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 Delek Logistics Partners are associated (or correlated) with Ultrapar Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrapar Participacoes has no effect on the direction of Delek Logistics i.e., Delek Logistics and Ultrapar Participacoes go up and down completely randomly.

Pair Corralation between Delek Logistics and Ultrapar Participacoes

Considering the 90-day investment horizon Delek Logistics Partners is expected to generate 0.8 times more return on investment than Ultrapar Participacoes. However, Delek Logistics Partners is 1.25 times less risky than Ultrapar Participacoes. It trades about -0.01 of its potential returns per unit of risk. Ultrapar Participacoes SA is currently generating about -0.22 per unit of risk. If you would invest  4,104  in Delek Logistics Partners on September 5, 2024 and sell it today you would lose (114.00) from holding Delek Logistics Partners or give up 2.78% of portfolio value over 90 days.

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

Delek Logistics Partners  vs.  Ultrapar Participacoes SA

Delek Logistics Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delek Logistics Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Delek Logistics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Ultrapar Participacoes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrapar Participacoes SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Delek Logistics and Ultrapar Participacoes

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

The idea behind Delek Logistics Partners and Ultrapar Participacoes 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.