Correlation Between Paycom Soft and Monolithic Power

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

By analyzing existing cross correlation between Paycom Soft and Monolithic Power Systems, you can compare the effects of market volatilities on Paycom Soft and Monolithic Power 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 Paycom Soft with a short position of Monolithic Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Soft and Monolithic Power.

Diversification Opportunities for Paycom Soft and Monolithic Power

-0.65

Correlation Coefficient

Paycom Soft  Monolithic Power

Excellent diversification

The 3 months correlation between Paycom and Monolithic is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Monolithic Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monolithic Power Systems and Paycom Soft 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 Paycom Soft are associated (or correlated) with Monolithic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monolithic Power Systems has no effect on the direction of Paycom Soft i.e., Paycom Soft and Monolithic Power go up and down completely randomly.

Pair Corralation between Paycom Soft and Monolithic Power

Given the investment horizon of 90 days Paycom Soft is expected to under-perform the Monolithic Power. But the stock apears to be less risky and, when comparing its historical volatility, Paycom Soft is 1.43 times less risky than Monolithic Power. The stock trades about -0.14 of its potential returns per unit of risk. The Monolithic Power Systems is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  71,388  in Monolithic Power Systems on May 16, 2025 and sell it today you would earn a total of  14,792  from holding Monolithic Power Systems or generate 20.72% return on investment over 90 days.

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

Paycom Soft  vs.  Monolithic Power Systems

Paycom Soft

Risk-Adjusted Performance

Weakest

Over the last 90 days Paycom Soft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Monolithic Power Systems

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Monolithic Power Systems are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Monolithic Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paycom Soft and Monolithic Power

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

The idea behind Paycom Soft and Monolithic Power Systems 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.