Correlation Between Houlihan Lokey and Helix Acquisition

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

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

Diversification Opportunities for Houlihan Lokey and Helix Acquisition

-0.31

Correlation Coefficient

Houlihan Lokey  Helix Acquisition

Very good diversification

The 3 months correlation between Houlihan and Helix is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Houlihan Lokey and Helix Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helix Acquisition Corp 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 Helix Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helix Acquisition Corp has no effect on the direction of Houlihan Lokey i.e., Houlihan Lokey and Helix Acquisition go up and down completely randomly.

Pair Corralation between Houlihan Lokey and Helix Acquisition

Considering the 90-day investment horizon Houlihan Lokey is expected to under-perform the Helix Acquisition. In addition to that, Houlihan Lokey is 1.5 times more volatile than Helix Acquisition Corp. It trades about -0.06 of its total potential returns per unit of risk. Helix Acquisition Corp is currently generating about -0.02 per unit of volatility. If you would invest  1,097  in Helix Acquisition Corp on December 28, 2024 and sell it today you would lose (22.00) from holding Helix Acquisition Corp or give up 2.01% of portfolio value over 90 days.

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

Houlihan Lokey  vs.  Helix Acquisition Corp

Houlihan Lokey

Risk-Adjusted Performance

Very Weak

Over the last 90 days Houlihan Lokey has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Helix Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Helix Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Helix Acquisition is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Houlihan Lokey and Helix Acquisition

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

The idea behind Houlihan Lokey and Helix Acquisition Corp 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.