Correlation Between Vale SA and Ultragenyx

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

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

Diversification Opportunities for Vale SA and Ultragenyx

-0.41

Correlation Coefficient

Vale SA  Ultragenyx

Very good diversification

The 3 months correlation between Vale and Ultragenyx is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA ADR and Ultragenyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultragenyx and Vale SA 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 Vale SA ADR are associated (or correlated) with Ultragenyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultragenyx has no effect on the direction of Vale SA i.e., Vale SA and Ultragenyx go up and down completely randomly.

Pair Corralation between Vale SA and Ultragenyx

Given the investment horizon of 90 days Vale SA ADR is expected to generate 0.6 times more return on investment than Ultragenyx. However, Vale SA ADR is 1.67 times less risky than Ultragenyx. It trades about 0.0 of its potential returns per unit of risk. Ultragenyx is currently generating about 0.0 per unit of risk. If you would invest  1,049  in Vale SA ADR on May 7, 2025 and sell it today you would lose (64.00) from holding Vale SA ADR or give up 6.1% of portfolio value over 90 days.

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

Vale SA ADR  vs.  Ultragenyx

Vale SA ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Vale SA may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Ultragenyx

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultragenyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Vale SA and Ultragenyx

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

The idea behind Vale SA ADR and Ultragenyx 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.