Correlation Between Planet Fitness and EMPEROR ENT

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

By analyzing existing cross correlation between Planet Fitness and EMPEROR ENT HOTEL, you can compare the effects of market volatilities on Planet Fitness and EMPEROR ENT 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 EMPEROR ENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Fitness and EMPEROR ENT.

Diversification Opportunities for Planet Fitness and EMPEROR ENT

-0.12

Correlation Coefficient

Planet Fitness  EMPEROR ENT

Good diversification

The 3 months correlation between Planet and EMPEROR is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and EMPEROR ENT HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMPEROR ENT HOTEL 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 are associated (or correlated) with EMPEROR ENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMPEROR ENT HOTEL has no effect on the direction of Planet Fitness i.e., Planet Fitness and EMPEROR ENT go up and down completely randomly.

Pair Corralation between Planet Fitness and EMPEROR ENT

Assuming the 90 days horizon Planet Fitness is expected to under-perform the EMPEROR ENT. In addition to that, Planet Fitness is 1.05 times more volatile than EMPEROR ENT HOTEL. It trades about -0.04 of its total potential returns per unit of risk. EMPEROR ENT HOTEL is currently generating about -0.02 per unit of volatility. If you would invest  3.40  in EMPEROR ENT HOTEL on December 21, 2024 and sell it today you would lose (0.15) from holding EMPEROR ENT HOTEL or give up 4.41% of portfolio value over 90 days.

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

Planet Fitness  vs.  EMPEROR ENT HOTEL

Planet Fitness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Planet Fitness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

EMPEROR ENT HOTEL

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Planet Fitness and EMPEROR ENT

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

The idea behind Planet Fitness and EMPEROR ENT HOTEL 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..