Correlation Between Gravitas Education and Chegg

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

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

Diversification Opportunities for Gravitas Education and Chegg

-0.3

Correlation Coefficient

Gravitas Education  Chegg

Very good diversification

The 3 months correlation between Gravitas and Chegg is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gravitas Education Holdings and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc and Gravitas 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 Gravitas Education Holdings 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 Gravitas Education i.e., Gravitas Education and Chegg go up and down completely randomly.

Pair Corralation between Gravitas Education and Chegg

If you would invest  173.00  in Chegg Inc on September 19, 2024 and sell it today you would earn a total of  46.00  from holding Chegg Inc or generate 26.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Gravitas Education Holdings  vs.  Chegg Inc

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.

Chegg Inc

Risk-Adjusted Performance

5 of 100

OK

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.

Pair Trading with Gravitas Education and Chegg

The main advantage of trading using opposite Gravitas Education and Chegg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gravitas 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 Gravitas Education Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.