Correlation Between Gaotu Techedu and Chegg

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

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

Diversification Opportunities for Gaotu Techedu and Chegg

0.52

Correlation Coefficient

Gaotu Techedu  Chegg

Very weak diversification

The 3 months correlation between Gaotu and Chegg is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Gaotu Techedu DRC and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc and Gaotu Techedu 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 Gaotu Techedu DRC 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 Gaotu Techedu i.e., Gaotu Techedu and Chegg go up and down completely randomly.

Pair Corralation between Gaotu Techedu and Chegg

Given the investment horizon of 90 days Gaotu Techedu is expected to generate 14.49 times less return on investment than Chegg. But when comparing it to its historical volatility, Gaotu Techedu DRC is 2.74 times less risky than Chegg. It trades about 0.03 of its potential returns per unit of risk. Chegg Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  72.00  in Chegg Inc on May 6, 2025 and sell it today you would earn a total of  54.00  from holding Chegg Inc or generate 75.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Gaotu Techedu DRC  vs.  Chegg Inc

Gaotu Techedu DRC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaotu Techedu DRC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Gaotu Techedu is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Chegg Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chegg Inc are ranked lower than 11 (%) 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 Gaotu Techedu and Chegg

The main advantage of trading using opposite Gaotu Techedu and Chegg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaotu Techedu 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 Gaotu Techedu DRC 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.