Correlation Between Delek Energy and Ultrapar Participacoes

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Can any of the company-specific risk be diversified away by investing in both Delek Energy and Ultrapar Participacoes 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 Delek Energy and Ultrapar Participacoes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Energy and Ultrapar Participacoes SA, you can compare the effects of market volatilities on Delek Energy and Ultrapar Participacoes 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 Delek Energy with a short position of Ultrapar Participacoes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Energy and Ultrapar Participacoes.

Diversification Opportunities for Delek Energy and Ultrapar Participacoes

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Delek and Ultrapar is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Delek Energy and Ultrapar Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrapar Participacoes and Delek Energy 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 Delek Energy are associated (or correlated) with Ultrapar Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrapar Participacoes has no effect on the direction of Delek Energy i.e., Delek Energy and Ultrapar Participacoes go up and down completely randomly.

Pair Corralation between Delek Energy and Ultrapar Participacoes

Allowing for the 90-day total investment horizon Delek Energy is expected to under-perform the Ultrapar Participacoes. But the stock apears to be less risky and, when comparing its historical volatility, Delek Energy is 1.14 times less risky than Ultrapar Participacoes. The stock trades about -0.48 of its potential returns per unit of risk. The Ultrapar Participacoes SA is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  570.00  in Ultrapar Participacoes SA on February 6, 2024 and sell it today you would lose (39.00) from holding Ultrapar Participacoes SA or give up 6.84% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Delek Energy  vs.  Ultrapar Participacoes SA

 Performance 
       Timeline  
Delek Energy 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Delek Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Delek Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Ultrapar Participacoes 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 relatively invariable technical and fundamental indicators, Ultrapar Participacoes is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Delek Energy and Ultrapar Participacoes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Delek Energy and Ultrapar Participacoes

The main advantage of trading using opposite Delek Energy and Ultrapar Participacoes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Energy position performs unexpectedly, Ultrapar Participacoes 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 Participacoes will offset losses from the drop in Ultrapar Participacoes' long position.
The idea behind Delek Energy and Ultrapar Participacoes 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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