Correlation Between Bit Digital and Houlihan Lokey

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

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

Diversification Opportunities for Bit Digital and Houlihan Lokey

-0.22

Correlation Coefficient

Bit Digital  Houlihan Lokey

Very good diversification

The 3 months correlation between Bit and Houlihan is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bit Digital and Houlihan Lokey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Houlihan Lokey and Bit Digital 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 Bit Digital are associated (or correlated) with Houlihan Lokey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Houlihan Lokey has no effect on the direction of Bit Digital i.e., Bit Digital and Houlihan Lokey go up and down completely randomly.

Pair Corralation between Bit Digital and Houlihan Lokey

Given the investment horizon of 90 days Bit Digital is expected to generate 3.69 times more return on investment than Houlihan Lokey. However, Bit Digital is 3.69 times more volatile than Houlihan Lokey. It trades about 0.24 of its potential returns per unit of risk. Houlihan Lokey is currently generating about 0.29 per unit of risk. If you would invest  264.00  in Bit Digital on July 16, 2024 and sell it today you would earn a total of  65.00  from holding Bit Digital or generate 24.62% return on investment over 90 days.

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

Bit Digital  vs.  Houlihan Lokey

Bit Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bit Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in November 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Houlihan Lokey

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Houlihan Lokey are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain essential indicators, Houlihan Lokey demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bit Digital and Houlihan Lokey

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

The idea behind Bit Digital and Houlihan Lokey 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.