Correlation Between Monroe Capital and Puyi

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

By analyzing existing cross correlation between Monroe Capital Corp and Puyi Inc ADR, you can compare the effects of market volatilities on Monroe Capital and Puyi 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 Monroe Capital with a short position of Puyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monroe Capital and Puyi.

Diversification Opportunities for Monroe Capital and Puyi

0.37

Correlation Coefficient

Monroe Capital  Puyi

Weak diversification

The 3 months correlation between Monroe and Puyi is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Monroe Capital Corp and Puyi Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puyi Inc ADR and Monroe Capital 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 Monroe Capital Corp are associated (or correlated) with Puyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puyi Inc ADR has no effect on the direction of Monroe Capital i.e., Monroe Capital and Puyi go up and down completely randomly.

Pair Corralation between Monroe Capital and Puyi

If you would invest  763.00  in Monroe Capital Corp on September 1, 2024 and sell it today you would earn a total of  89.00  from holding Monroe Capital Corp or generate 11.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Monroe Capital Corp  vs.  Puyi Inc ADR

Monroe Capital Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monroe Capital Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Monroe Capital may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Puyi Inc ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Puyi Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Puyi is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Monroe Capital and Puyi

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

The idea behind Monroe Capital Corp and Puyi Inc ADR 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.