Correlation Between Planet Fitness and Golden Heaven

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

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

Diversification Opportunities for Planet Fitness and Golden Heaven

0.36

Correlation Coefficient

Planet Fitness  Golden Heaven

Weak diversification

The 3 months correlation between Planet and Golden is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Planet Fitness and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven Group 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 Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of Planet Fitness i.e., Planet Fitness and Golden Heaven go up and down completely randomly.

Pair Corralation between Planet Fitness and Golden Heaven

Given the investment horizon of 90 days Planet Fitness is expected to generate 0.25 times more return on investment than Golden Heaven. However, Planet Fitness is 3.95 times less risky than Golden Heaven. It trades about -0.25 of its potential returns per unit of risk. Golden Heaven Group is currently generating about -0.32 per unit of risk. If you would invest  10,767  in Planet Fitness on December 4, 2024 and sell it today you would lose (1,375) from holding Planet Fitness or give up 12.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Planet Fitness  vs.  Golden Heaven Group

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. In spite of comparatively stable basic indicators, Planet Fitness is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Golden Heaven Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Heaven Group 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 indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Planet Fitness and Golden Heaven

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

The idea behind Planet Fitness and Golden Heaven Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.