X-ray magnetic circular dichroism (XMCD) measurements on HoCo2 reveal the inversion of Co moment at temperatures higher than the critical temperature, Tc, showing that the net magnetization under a field of the Ho and Co sublattices remain antiparallel even above Tc. The Ho moment also changes its orientation to align antiparallel to the applied field at high temperature giving rise to a new magnetic configuration in the paramagnetic regime. Transverse susceptibility (TS) and small angle neutron scattering (SANS) measurements performed above Tc indicate the existence of sizable magnetic short-range correlated regions in HoCo2. First principles calculations based on spin polarized local-density approximation, LSDA+U havebeen performed to obtain insights on the origin of the short-range correlated volume.