Correlation Between Ultrapar Participacoes and PTL

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

Diversification Opportunities for Ultrapar Participacoes and PTL

-0.39

Correlation Coefficient

Ultrapar Participacoes  PTL

Very good diversification

The 3 months correlation between Ultrapar and PTL is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ultrapar Participacoes SA and PTL LTD Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTL LTD Ordinary 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 PTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTL LTD Ordinary has no effect on the direction of Ultrapar Participacoes i.e., Ultrapar Participacoes and PTL go up and down completely randomly.

Pair Corralation between Ultrapar Participacoes and PTL

Considering the 90-day investment horizon Ultrapar Participacoes SA is expected to under-perform the PTL. But the stock apears to be less risky and, when comparing its historical volatility, Ultrapar Participacoes SA is 4.36 times less risky than PTL. The stock trades about -0.07 of its potential returns per unit of risk. The PTL LTD Ordinary is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  762.00  in PTL LTD Ordinary on October 10, 2024 and sell it today you would earn a total of  338.00  from holding PTL LTD Ordinary or generate 44.36% return on investment over 90 days.

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

Ultrapar Participacoes SA  vs.  PTL LTD Ordinary

Ultrapar Participacoes

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

PTL LTD Ordinary

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PTL LTD Ordinary are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, PTL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ultrapar Participacoes and PTL

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

The idea behind Ultrapar Participacoes SA and PTL LTD Ordinary 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.