Correlation Between Playtech Plc and Planet Fitness

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

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

Diversification Opportunities for Playtech Plc and Planet Fitness

-0.02

Correlation Coefficient

Playtech Plc  Planet Fitness

Good diversification

The 3 months correlation between Playtech and Planet is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Playtech Plc 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 Playtech plc 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 has no effect on the direction of Playtech Plc i.e., Playtech Plc and Planet Fitness go up and down completely randomly.

Pair Corralation between Playtech Plc and Planet Fitness

Assuming the 90 days horizon Playtech plc is expected to under-perform the Planet Fitness. But the pink sheet apears to be less risky and, when comparing its historical volatility, Playtech plc is 1.36 times less risky than Planet Fitness. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Planet Fitness is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  9,968  in Planet Fitness on December 29, 2024 and sell it today you would lose (346.00) from holding Planet Fitness or give up 3.47% of portfolio value over 90 days.

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

Playtech plc  vs.  Planet Fitness

Playtech plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Playtech plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Playtech Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Playtech Plc and Planet Fitness

The main advantage of trading using opposite Playtech Plc and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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 Playtech plc and Planet Fitness 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.