Correlation Between Induction Healthcare and Planet Fitness

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

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

Diversification Opportunities for Induction Healthcare and Planet Fitness

0.03

Correlation Coefficient

Induction Healthcare  Planet Fitness

Significant diversification

The 3 months correlation between Induction and Planet is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group and Planet Fitness Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness Cl and Induction Healthcare 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 Induction Healthcare Group are associated (or correlated) with Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness Cl has no effect on the direction of Induction Healthcare i.e., Induction Healthcare and Planet Fitness go up and down completely randomly.

Pair Corralation between Induction Healthcare and Planet Fitness

Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the Planet Fitness. In addition to that, Induction Healthcare is 1.07 times more volatile than Planet Fitness Cl. It trades about -0.2 of its total potential returns per unit of risk. Planet Fitness Cl is currently generating about -0.08 per unit of volatility. If you would invest  9,980  in Planet Fitness Cl on November 29, 2024 and sell it today you would lose (977.00) from holding Planet Fitness Cl or give up 9.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Induction Healthcare Group  vs.  Planet Fitness Cl

Induction Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Induction Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Planet Fitness Cl

Risk-Adjusted Performance

Very Weak

Over the last 90 days Planet Fitness Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Induction Healthcare and Planet Fitness

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

The idea behind Induction Healthcare Group and Planet Fitness Cl 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.