Correlation Between IhumanInc and Chegg

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

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

Diversification Opportunities for IhumanInc and Chegg

0.59

Correlation Coefficient

IhumanInc  Chegg

Very weak diversification

The 3 months correlation between IhumanInc and Chegg is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding IhumanInc and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc and IhumanInc 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 IhumanInc 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 IhumanInc i.e., IhumanInc and Chegg go up and down completely randomly.

Pair Corralation between IhumanInc and Chegg

Allowing for the 90-day total investment horizon IhumanInc is expected to generate 0.68 times more return on investment than Chegg. However, IhumanInc is 1.46 times less risky than Chegg. It trades about -0.1 of its potential returns per unit of risk. Chegg Inc is currently generating about -0.24 per unit of risk. If you would invest  222.00  in IhumanInc on February 15, 2024 and sell it today you would lose (40.50) from holding IhumanInc or give up 18.24% of portfolio value over 90 days.

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

IhumanInc  vs.  Chegg Inc

IhumanInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IhumanInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Chegg Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chegg Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with IhumanInc and Chegg

The main advantage of trading using opposite IhumanInc and Chegg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IhumanInc 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 IhumanInc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.