Correlation Between Planet Fitness and Schweiter Technologies

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

By analyzing existing cross correlation between Planet Fitness Cl and Schweiter Technologies AG, you can compare the effects of market volatilities on Planet Fitness and Schweiter Technologies 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 Planet Fitness with a short position of Schweiter Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and Schweiter Technologies.

Diversification Opportunities for Planet Fitness and Schweiter Technologies

-0.02

Correlation Coefficient

Planet Fitness  Schweiter Technologies

Good diversification

The 3 months correlation between Planet and Schweiter is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness Cl and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies and Planet Fitness 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 Planet Fitness Cl are associated (or correlated) with Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Planet Fitness i.e., Planet Fitness and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Planet Fitness and Schweiter Technologies

Assuming the 90 days trading horizon Planet Fitness Cl is expected to generate 1.0 times more return on investment than Schweiter Technologies. However, Planet Fitness is 1.0 times more volatile than Schweiter Technologies AG. It trades about 0.14 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about 0.04 per unit of risk. If you would invest  8,171  in Planet Fitness Cl on September 16, 2024 and sell it today you would earn a total of  1,793  from holding Planet Fitness Cl or generate 21.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Planet Fitness Cl  vs.  Schweiter Technologies AG

Planet Fitness Cl

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Fitness Cl are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Planet Fitness unveiled solid returns over the last few months and may actually be approaching a breakup point.

Schweiter Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Schweiter Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Planet Fitness and Schweiter Technologies

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

The idea behind Planet Fitness Cl and Schweiter Technologies AG 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.