Correlation Between Ultrapar Participacoes and Crossamerica Partners

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

Diversification Opportunities for Ultrapar Participacoes and Crossamerica Partners

-0.34

Correlation Coefficient

Ultrapar Participacoes  Crossamerica Partners

Very good diversification

The 3 months correlation between Ultrapar and Crossamerica is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ultrapar Participacoes SA and Crossamerica Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossamerica Partners 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 Crossamerica Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crossamerica Partners has no effect on the direction of Ultrapar Participacoes i.e., Ultrapar Participacoes and Crossamerica Partners go up and down completely randomly.

Pair Corralation between Ultrapar Participacoes and Crossamerica Partners

Considering the 90-day investment horizon Ultrapar Participacoes SA is expected to under-perform the Crossamerica Partners. In addition to that, Ultrapar Participacoes is 1.79 times more volatile than Crossamerica Partners LP. It trades about -0.24 of its total potential returns per unit of risk. Crossamerica Partners LP is currently generating about 0.09 per unit of volatility. If you would invest  2,069  in Crossamerica Partners LP on September 17, 2024 and sell it today you would earn a total of  152.00  from holding Crossamerica Partners LP or generate 7.35% return on investment over 90 days.

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

Ultrapar Participacoes SA  vs.  Crossamerica Partners LP

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.

Crossamerica Partners

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crossamerica Partners LP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Crossamerica Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ultrapar Participacoes and Crossamerica Partners

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

The idea behind Ultrapar Participacoes SA and Crossamerica Partners LP 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.