Correlation Between Mercurity Fintech and Monroe Capital

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

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

Diversification Opportunities for Mercurity Fintech and Monroe Capital

-0.18

Correlation Coefficient

Mercurity Fintech  Monroe Capital

Good diversification

The 3 months correlation between Mercurity and Monroe is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mercurity Fintech Holding 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 Mercurity Fintech 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 Mercurity Fintech Holding 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 Mercurity Fintech i.e., Mercurity Fintech and Monroe Capital go up and down completely randomly.

Pair Corralation between Mercurity Fintech and Monroe Capital

Considering the 90-day investment horizon Mercurity Fintech Holding is expected to generate 4.48 times more return on investment than Monroe Capital. However, Mercurity Fintech is 4.48 times more volatile than Monroe Capital Corp. It trades about 0.24 of its potential returns per unit of risk. Monroe Capital Corp is currently generating about 0.12 per unit of risk. If you would invest  121.00  in Mercurity Fintech Holding on July 18, 2024 and sell it today you would earn a total of  47.00  from holding Mercurity Fintech Holding or generate 38.84% return on investment over 90 days.

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

Mercurity Fintech Holding  vs.  Monroe Capital Corp

Mercurity Fintech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercurity Fintech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Mercurity Fintech is not utilizing all of its potentials. The latest 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 inconsistent fundamental indicators, Monroe Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mercurity Fintech and Monroe Capital

The main advantage of trading using opposite Mercurity Fintech and Monroe Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercurity Fintech 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 Mercurity Fintech Holding 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.