Correlation Between Houlihan Lokey and PJT Partners

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

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

Diversification Opportunities for Houlihan Lokey and PJT Partners

0.48

Correlation Coefficient

Houlihan Lokey  PJT Partners

Very weak diversification

The 3 months correlation between Houlihan and PJT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Houlihan Lokey and PJT Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJT Partners 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 PJT Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJT Partners has no effect on the direction of Houlihan Lokey i.e., Houlihan Lokey and PJT Partners go up and down completely randomly.

Pair Corralation between Houlihan Lokey and PJT Partners

Considering the 90-day investment horizon Houlihan Lokey is expected to under-perform the PJT Partners. But the stock apears to be less risky and, when comparing its historical volatility, Houlihan Lokey is 1.32 times less risky than PJT Partners. The stock trades about -0.12 of its potential returns per unit of risk. The PJT Partners is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  16,196  in PJT Partners on November 28, 2024 and sell it today you would lose (256.00) from holding PJT Partners or give up 1.58% of portfolio value over 90 days.

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

Houlihan Lokey  vs.  PJT Partners

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 weak 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.

PJT Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days PJT Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking indicators, PJT Partners is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Houlihan Lokey and PJT Partners

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

The idea behind Houlihan Lokey and PJT Partners 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.