Correlation Between Ultrapar Participacoes and Blue Dolphin

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

Diversification Opportunities for Ultrapar Participacoes and Blue Dolphin

-0.91

Correlation Coefficient

Ultrapar Participacoes  Blue Dolphin

Pay attention - limited upside

The 3 months correlation between Ultrapar and Blue is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ultrapar Participacoes SA and Blue Dolphin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Dolphin 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 Blue Dolphin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Dolphin Energy has no effect on the direction of Ultrapar Participacoes i.e., Ultrapar Participacoes and Blue Dolphin go up and down completely randomly.

Pair Corralation between Ultrapar Participacoes and Blue Dolphin

If you would invest  606.00  in Blue Dolphin Energy on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Blue Dolphin Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	0.4%
Values	Daily Returns

Ultrapar Participacoes SA  vs.  Blue Dolphin Energy

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 uncertain 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.

Blue Dolphin Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Dolphin Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Blue Dolphin is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ultrapar Participacoes and Blue Dolphin

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

The idea behind Ultrapar Participacoes SA and Blue Dolphin Energy 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .