Correlation Between Matthews India and Houlihan Lokey

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

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

Diversification Opportunities for Matthews India and Houlihan Lokey

0.51

Correlation Coefficient

Matthews India  Houlihan Lokey

Very weak diversification

The 3 months correlation between Matthews and Houlihan is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Matthews India Fund and Houlihan Lokey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Houlihan Lokey and Matthews India 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 Matthews India Fund 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 Matthews India i.e., Matthews India and Houlihan Lokey go up and down completely randomly.

Pair Corralation between Matthews India and Houlihan Lokey

Assuming the 90 days horizon Matthews India Fund is expected to under-perform the Houlihan Lokey. But the mutual fund apears to be less risky and, when comparing its historical volatility, Matthews India Fund is 1.42 times less risky than Houlihan Lokey. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Houlihan Lokey is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  16,365  in Houlihan Lokey on May 7, 2025 and sell it today you would earn a total of  2,950  from holding Houlihan Lokey or generate 18.03% return on investment over 90 days.

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

Matthews India Fund  vs.  Houlihan Lokey

Matthews India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matthews India Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Matthews India is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Houlihan Lokey

Risk-Adjusted Performance

Solid

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.

Pair Trading with Matthews India and Houlihan Lokey

The main advantage of trading using opposite Matthews India and Houlihan Lokey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews India 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 Matthews India Fund 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.