Correlation Between BOS Better and Chegg

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

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

Diversification Opportunities for BOS Better and Chegg

-0.32

Correlation Coefficient

BOS Better  Chegg

Very good diversification

The 3 months correlation between BOS and Chegg is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BOS Better Online and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc and BOS Better 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 BOS Better Online 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 BOS Better i.e., BOS Better and Chegg go up and down completely randomly.

Pair Corralation between BOS Better and Chegg

Given the investment horizon of 90 days BOS Better Online is expected to under-perform the Chegg. But the stock apears to be less risky and, when comparing its historical volatility, BOS Better Online is 1.78 times less risky than Chegg. The stock trades about -0.2 of its potential returns per unit of risk. The Chegg Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  722.00  in Chegg Inc on January 29, 2024 and sell it today you would lose (12.00) from holding Chegg Inc or give up 1.66% of portfolio value over 90 days.

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

BOS Better Online  vs.  Chegg Inc

BOS Better Online

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BOS Better Online are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, BOS Better is not utilizing all of its potentials. The current 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 BOS Better and Chegg

The main advantage of trading using opposite BOS Better and Chegg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOS Better 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 BOS Better Online 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.