Correlation Between Ultrapar Participaes and IRPC Public

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

Diversification Opportunities for Ultrapar Participaes and IRPC Public

-0.3

Correlation Coefficient

Ultrapar Participaes  IRPC Public

Very good diversification

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

Pair Corralation between Ultrapar Participaes and IRPC Public

Assuming the 90 days trading horizon Ultrapar Participaes SA is expected to under-perform the IRPC Public. But the stock apears to be less risky and, when comparing its historical volatility, Ultrapar Participaes SA is 1.91 times less risky than IRPC Public. The stock trades about -0.06 of its potential returns per unit of risk. The IRPC Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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

Ultrapar Participaes SA  vs.  IRPC Public

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.

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.

Pair Trading with Ultrapar Participaes and IRPC Public

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

The idea behind Ultrapar Participaes SA and IRPC Public 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.