Correlation Between Full Truck and Gaotu Techedu

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

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

Diversification Opportunities for Full Truck and Gaotu Techedu

0.44

Correlation Coefficient

Full Truck  Gaotu Techedu

Very weak diversification

The 3 months correlation between Full and Gaotu is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Full Truck Alliance and Gaotu Techedu DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaotu Techedu DRC and Full Truck 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 Full Truck Alliance are associated (or correlated) with Gaotu Techedu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaotu Techedu DRC has no effect on the direction of Full Truck i.e., Full Truck and Gaotu Techedu go up and down completely randomly.

Pair Corralation between Full Truck and Gaotu Techedu

Considering the 90-day investment horizon Full Truck Alliance is expected to under-perform the Gaotu Techedu. In addition to that, Full Truck is 1.05 times more volatile than Gaotu Techedu DRC. It trades about -0.02 of its total potential returns per unit of risk. Gaotu Techedu DRC is currently generating about 0.06 per unit of volatility. If you would invest  325.00  in Gaotu Techedu DRC on May 7, 2025 and sell it today you would earn a total of  28.00  from holding Gaotu Techedu DRC or generate 8.62% return on investment over 90 days.

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

Full Truck Alliance  vs.  Gaotu Techedu DRC

Full Truck Alliance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Full Truck Alliance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Full Truck is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Gaotu Techedu DRC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gaotu Techedu DRC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gaotu Techedu may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Full Truck and Gaotu Techedu

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

The idea behind Full Truck Alliance and Gaotu Techedu DRC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.