Correlation Between Castle Biosciences and ISpecimen

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

By analyzing existing cross correlation between Castle Biosciences and iSpecimen, you can compare the effects of market volatilities on Castle Biosciences and ISpecimen 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 Castle Biosciences with a short position of ISpecimen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castle Biosciences and ISpecimen.

Diversification Opportunities for Castle Biosciences and ISpecimen

-0.18

Correlation Coefficient

Castle Biosciences  ISpecimen

Good diversification

The 3 months correlation between Castle and ISpecimen is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and iSpecimen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSpecimen and Castle Biosciences 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 Castle Biosciences are associated (or correlated) with ISpecimen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSpecimen has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and ISpecimen go up and down completely randomly.

Pair Corralation between Castle Biosciences and ISpecimen

Given the investment horizon of 90 days Castle Biosciences is expected to under-perform the ISpecimen. But the stock apears to be less risky and, when comparing its historical volatility, Castle Biosciences is 2.72 times less risky than ISpecimen. The stock trades about -0.01 of its potential returns per unit of risk. The iSpecimen is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  386.00  in iSpecimen on September 13, 2024 and sell it today you would lose (38.00) from holding iSpecimen or give up 9.84% of portfolio value over 90 days.

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

Castle Biosciences  vs.  iSpecimen

Castle Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castle Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Castle Biosciences is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

iSpecimen

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iSpecimen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, ISpecimen exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Castle Biosciences and ISpecimen

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

The idea behind Castle Biosciences and iSpecimen 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.