Correlation Between Puyi and Monroe Capital

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

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

Diversification Opportunities for Puyi and Monroe Capital

0.3

Correlation Coefficient

Puyi  Monroe Capital

Weak diversification

The 3 months correlation between Puyi and Monroe is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Puyi Inc ADR and Monroe Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monroe Capital Corp and Puyi 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 Puyi Inc ADR are associated (or correlated) with Monroe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monroe Capital Corp has no effect on the direction of Puyi i.e., Puyi and Monroe Capital go up and down completely randomly.

Pair Corralation between Puyi and Monroe Capital

If you would invest  763.00  in Monroe Capital Corp on August 31, 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	1.56%
Values	Daily Returns

Puyi Inc ADR  vs.  Monroe Capital Corp

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.

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.

Pair Trading with Puyi and Monroe Capital

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

The idea behind Puyi Inc ADR and Monroe Capital Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.