Correlation Between HERBALIFE and Doral Group

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

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

Diversification Opportunities for HERBALIFE and Doral Group

-0.12

Correlation Coefficient

HERBALIFE  Doral Group

Good diversification

The 3 months correlation between HERBALIFE and Doral is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding HERBALIFE and Doral Group Renewable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doral Group Renewable and HERBALIFE 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 HERBALIFE are associated (or correlated) with Doral Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doral Group Renewable has no effect on the direction of HERBALIFE i.e., HERBALIFE and Doral Group go up and down completely randomly.

Pair Corralation between HERBALIFE and Doral Group

Assuming the 90 days trading horizon HERBALIFE is expected to under-perform the Doral Group. In addition to that, HERBALIFE is 1.52 times more volatile than Doral Group Renewable. It trades about -0.08 of its total potential returns per unit of risk. Doral Group Renewable is currently generating about -0.06 per unit of volatility. If you would invest  126,700  in Doral Group Renewable on September 15, 2024 and sell it today you would lose (3,800) from holding Doral Group Renewable or give up 3.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

HERBALIFE  vs.  Doral Group Renewable

HERBALIFE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HERBALIFE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, HERBALIFE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Doral Group Renewable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Doral Group Renewable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HERBALIFE and Doral Group

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

The idea behind HERBALIFE and Doral Group Renewable 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.