Correlation Between Chegg and Gravitas Education

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

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

Diversification Opportunities for Chegg and Gravitas Education

-0.3

Correlation Coefficient

Chegg  Gravitas Education

Very good diversification

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

Pair Corralation between Chegg and Gravitas Education

Given the investment horizon of 90 days Chegg Inc is expected to under-perform the Gravitas Education. In addition to that, Chegg is 1.0 times more volatile than Gravitas Education Holdings. It trades about -0.08 of its total potential returns per unit of risk. Gravitas Education Holdings is currently generating about 0.04 per unit of volatility. If you would invest  1,155  in Gravitas Education Holdings on September 19, 2024 and sell it today you would earn a total of  154.00  from holding Gravitas Education Holdings or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.48%
Values	Daily Returns

Chegg Inc  vs.  Gravitas Education Holdings

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 weak technical and fundamental indicators, Chegg reported solid returns over the last few months and may actually be approaching a breakup point.

Gravitas Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Chegg and Gravitas Education

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

The idea behind Chegg Inc and Gravitas Education Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.