Correlation Between Houlihan Lokey and SAITECH Global

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

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

Diversification Opportunities for Houlihan Lokey and SAITECH Global

-0.71

Correlation Coefficient

Houlihan Lokey  SAITECH Global

Pay attention - limited upside

The 3 months correlation between Houlihan and SAITECH is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Houlihan Lokey and SAITECH Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAITECH Global and Houlihan Lokey 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 Houlihan Lokey are associated (or correlated) with SAITECH Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAITECH Global has no effect on the direction of Houlihan Lokey i.e., Houlihan Lokey and SAITECH Global go up and down completely randomly.

Pair Corralation between Houlihan Lokey and SAITECH Global

Considering the 90-day investment horizon Houlihan Lokey is expected to generate 0.48 times more return on investment than SAITECH Global. However, Houlihan Lokey is 2.08 times less risky than SAITECH Global. It trades about 0.19 of its potential returns per unit of risk. SAITECH Global is currently generating about -0.09 per unit of risk. If you would invest  15,145  in Houlihan Lokey on August 31, 2024 and sell it today you would earn a total of  3,598  from holding Houlihan Lokey or generate 23.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	30.16%
Values	Daily Returns

Houlihan Lokey  vs.  SAITECH Global

Houlihan Lokey

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Houlihan Lokey are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak essential indicators, Houlihan Lokey demonstrated solid returns over the last few months and may actually be approaching a breakup point.

SAITECH Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAITECH Global 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 fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Houlihan Lokey and SAITECH Global

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

The idea behind Houlihan Lokey and SAITECH Global 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.