Correlation Between Graham Holdings and Chegg

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

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

Diversification Opportunities for Graham Holdings and Chegg

-0.2

Correlation Coefficient

Graham Holdings  Chegg

Good diversification

The 3 months correlation between Graham and Chegg is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc and Graham Holdings 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 Graham Holdings Co 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 Graham Holdings i.e., Graham Holdings and Chegg go up and down completely randomly.

Pair Corralation between Graham Holdings and Chegg

Considering the 90-day investment horizon Graham Holdings Co is expected to generate 0.56 times more return on investment than Chegg. However, Graham Holdings Co is 1.78 times less risky than Chegg. It trades about 0.0 of its potential returns per unit of risk. Chegg Inc is currently generating about -0.24 per unit of risk. If you would invest  70,341  in Graham Holdings Co on January 24, 2024 and sell it today you would lose (266.00) from holding Graham Holdings Co or give up 0.38% of portfolio value over 90 days.

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

Graham Holdings Co  vs.  Chegg Inc

Graham Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graham Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Graham Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Graham Holdings and Chegg

The main advantage of trading using opposite Graham Holdings and Chegg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham Holdings 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 Graham Holdings Co 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.