Correlation Between Ultrapar Participaes and MRV Engenharia

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

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

Diversification Opportunities for Ultrapar Participaes and MRV Engenharia

0.85

Correlation Coefficient

Ultrapar Participaes  MRV Engenharia

Very poor diversification

The 3 months correlation between Ultrapar and MRV is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ultrapar Participaes SA and MRV Engenharia e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRV Engenharia e and Ultrapar Participaes 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 Participaes SA are associated (or correlated) with MRV Engenharia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRV Engenharia e has no effect on the direction of Ultrapar Participaes i.e., Ultrapar Participaes and MRV Engenharia go up and down completely randomly.

Pair Corralation between Ultrapar Participaes and MRV Engenharia

Assuming the 90 days trading horizon Ultrapar Participaes SA is expected to generate 0.66 times more return on investment than MRV Engenharia. However, Ultrapar Participaes SA is 1.51 times less risky than MRV Engenharia. It trades about -0.17 of its potential returns per unit of risk. MRV Engenharia e is currently generating about -0.14 per unit of risk. If you would invest  2,269  in Ultrapar Participaes SA on September 3, 2024 and sell it today you would lose (475.00) from holding Ultrapar Participaes SA or give up 20.93% of portfolio value over 90 days.

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

Ultrapar Participaes SA  vs.  MRV Engenharia e

Ultrapar Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrapar Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MRV Engenharia e

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MRV Engenharia e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ultrapar Participaes and MRV Engenharia

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

The idea behind Ultrapar Participaes SA and MRV Engenharia e 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.