Correlation Between Houlihan Lokey and Mawson Infrastructure

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

By analyzing existing cross correlation between Houlihan Lokey and Mawson Infrastructure Group, you can compare the effects of market volatilities on Houlihan Lokey and Mawson Infrastructure 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 Mawson Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Houlihan Lokey and Mawson Infrastructure.

Diversification Opportunities for Houlihan Lokey and Mawson Infrastructure

0.04

Correlation Coefficient

Houlihan Lokey  Mawson Infrastructure

Significant diversification

The 3 months correlation between Houlihan and Mawson is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Houlihan Lokey and Mawson Infrastructure Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mawson Infrastructure 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 Mawson Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mawson Infrastructure has no effect on the direction of Houlihan Lokey i.e., Houlihan Lokey and Mawson Infrastructure go up and down completely randomly.

Pair Corralation between Houlihan Lokey and Mawson Infrastructure

Considering the 90-day investment horizon Houlihan Lokey is expected to generate 7.7 times less return on investment than Mawson Infrastructure. But when comparing it to its historical volatility, Houlihan Lokey is 6.83 times less risky than Mawson Infrastructure. It trades about 0.05 of its potential returns per unit of risk. Mawson Infrastructure Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  127.00  in Mawson Infrastructure Group on February 7, 2024 and sell it today you would earn a total of  3.00  from holding Mawson Infrastructure Group or generate 2.36% return on investment over 90 days.

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

Houlihan Lokey  vs.  Mawson Infrastructure Group

Houlihan Lokey

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Houlihan Lokey are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak essential indicators, Houlihan Lokey may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Mawson Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mawson Infrastructure Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Houlihan Lokey and Mawson Infrastructure

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

The idea behind Houlihan Lokey and Mawson Infrastructure Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.