Correlation Between Cabaletta Bio and Castle Biosciences

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

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

Diversification Opportunities for Cabaletta Bio and Castle Biosciences

-0.11

Correlation Coefficient

Cabaletta Bio  Castle Biosciences

Good diversification

The 3 months correlation between Cabaletta and Castle is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cabaletta Bio and Castle Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castle Biosciences and Cabaletta Bio 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 Cabaletta Bio are associated (or correlated) with Castle Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castle Biosciences has no effect on the direction of Cabaletta Bio i.e., Cabaletta Bio and Castle Biosciences go up and down completely randomly.

Pair Corralation between Cabaletta Bio and Castle Biosciences

Given the investment horizon of 90 days Cabaletta Bio is expected to generate 1.44 times less return on investment than Castle Biosciences. In addition to that, Cabaletta Bio is 1.69 times more volatile than Castle Biosciences. It trades about 0.06 of its total potential returns per unit of risk. Castle Biosciences is currently generating about 0.16 per unit of volatility. If you would invest  1,852  in Castle Biosciences on September 18, 2025 and sell it today you would earn a total of  2,053  from holding Castle Biosciences or generate 110.85% return on investment over 90 days.

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

Cabaletta Bio  vs.  Castle Biosciences

Cabaletta Bio

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Cabaletta Bio are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Cabaletta Bio sustained solid returns over the last few months and may actually be approaching a breakup point.

Castle Biosciences

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Castle Biosciences are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Castle Biosciences disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cabaletta Bio and Castle Biosciences

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

The idea behind Cabaletta Bio and Castle Biosciences 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 Commodity Directory module to find actively traded commodities issued by global exchanges.