Correlation Between Ultrapar Participacoes and Smallcap

Can any of the company-specific risk be diversified away by investing in both Ultrapar Participacoes and Smallcap 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 Smallcap 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 Smallcap Sp 600, you can compare the effects of market volatilities on Ultrapar Participacoes and Smallcap 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 Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrapar Participacoes and Smallcap.

Diversification Opportunities for Ultrapar Participacoes and Smallcap

0.47

Correlation Coefficient

Ultrapar Participacoes  Smallcap

Very weak diversification

The 3 months correlation between Ultrapar and Smallcap is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ultrapar Participacoes SA and Smallcap Sp 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Sp 600 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 Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Sp 600 has no effect on the direction of Ultrapar Participacoes i.e., Ultrapar Participacoes and Smallcap go up and down completely randomly.

Pair Corralation between Ultrapar Participacoes and Smallcap

Considering the 90-day investment horizon Ultrapar Participacoes SA is expected to under-perform the Smallcap. In addition to that, Ultrapar Participacoes is 1.74 times more volatile than Smallcap Sp 600. It trades about -0.02 of its total potential returns per unit of risk. Smallcap Sp 600 is currently generating about 0.02 per unit of volatility. If you would invest  2,565  in Smallcap Sp 600 on May 27, 2025 and sell it today you would earn a total of  93.00  from holding Smallcap Sp 600 or generate 3.63% return on investment over 90 days.

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

Ultrapar Participacoes SA  vs.  Smallcap Sp 600

Ultrapar Participacoes

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrapar Participacoes SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Ultrapar Participacoes may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Smallcap Sp 600

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Sp 600 are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Smallcap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Ultrapar Participacoes and Smallcap

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

The idea behind Ultrapar Participacoes SA and Smallcap Sp 600 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.