Correlation Between IDP EDUCATION and Chegg

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

By analyzing existing cross correlation between IDP EDUCATION LTD and Chegg Inc, you can compare the effects of market volatilities on IDP EDUCATION and Chegg 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 IDP EDUCATION with a short position of Chegg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDP EDUCATION and Chegg.

Diversification Opportunities for IDP EDUCATION and Chegg

-0.69

Correlation Coefficient

IDP EDUCATION  Chegg

Excellent diversification

The 3 months correlation between IDP and Chegg is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding IDP EDUCATION LTD and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc and IDP EDUCATION 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 IDP EDUCATION LTD are associated (or correlated) with Chegg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chegg Inc has no effect on the direction of IDP EDUCATION i.e., IDP EDUCATION and Chegg go up and down completely randomly.

Pair Corralation between IDP EDUCATION and Chegg

Assuming the 90 days horizon IDP EDUCATION LTD is expected to under-perform the Chegg. But the stock apears to be less risky and, when comparing its historical volatility, IDP EDUCATION LTD is 1.92 times less risky than Chegg. The stock trades about -0.25 of its potential returns per unit of risk. The Chegg Inc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  193.00  in Chegg Inc on September 23, 2024 and sell it today you would lose (17.00) from holding Chegg Inc or give up 8.81% of portfolio value over 90 days.

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

IDP EDUCATION LTD  vs.  Chegg Inc

IDP EDUCATION LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IDP EDUCATION LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Chegg Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chegg Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chegg reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IDP EDUCATION and Chegg

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

The idea behind IDP EDUCATION LTD and Chegg Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.