Correlation Between IRPC Public and Ultrapar Participaes

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

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

Diversification Opportunities for IRPC Public and Ultrapar Participaes

-0.3

Correlation Coefficient

IRPC Public  Ultrapar Participaes

Very good diversification

The 3 months correlation between IRPC and Ultrapar is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding IRPC Public and Ultrapar Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrapar Participaes and IRPC Public 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 IRPC Public are associated (or correlated) with Ultrapar Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrapar Participaes has no effect on the direction of IRPC Public i.e., IRPC Public and Ultrapar Participaes go up and down completely randomly.

Pair Corralation between IRPC Public and Ultrapar Participaes

Assuming the 90 days trading horizon IRPC Public is expected to generate 1.91 times more return on investment than Ultrapar Participaes. However, IRPC Public is 1.91 times more volatile than Ultrapar Participaes SA. It trades about 0.05 of its potential returns per unit of risk. Ultrapar Participaes SA is currently generating about -0.06 per unit of risk. If you would invest  1.65  in IRPC Public on April 24, 2025 and sell it today you would earn a total of  0.15  from holding IRPC Public or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

IRPC Public  vs.  Ultrapar Participaes SA

IRPC Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IRPC Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward indicators, IRPC Public reported solid returns over the last few months and may actually be approaching a breakup point.

Ultrapar Participaes

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with IRPC Public and Ultrapar Participaes

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

The idea behind IRPC Public and Ultrapar Participaes 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.