Correlation Between C4 Therapeutics and Castle Biosciences

Can any of the company-specific risk be diversified away by investing in both C4 Therapeutics 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 C4 Therapeutics and Castle Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C4 Therapeutics and Castle Biosciences, you can compare the effects of market volatilities on C4 Therapeutics 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 C4 Therapeutics with a short position of Castle Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of C4 Therapeutics and Castle Biosciences.

Diversification Opportunities for C4 Therapeutics and Castle Biosciences

0.04

Correlation Coefficient

C4 Therapeutics  Castle Biosciences

Significant diversification

The 3 months correlation between CCCC and Castle is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding C4 Therapeutics and Castle Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castle Biosciences and C4 Therapeutics 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 C4 Therapeutics 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 C4 Therapeutics i.e., C4 Therapeutics and Castle Biosciences go up and down completely randomly.

Pair Corralation between C4 Therapeutics and Castle Biosciences

Given the investment horizon of 90 days C4 Therapeutics is expected to generate 1.53 times more return on investment than Castle Biosciences. However, C4 Therapeutics is 1.53 times more volatile than Castle Biosciences. It trades about 0.15 of its potential returns per unit of risk. Castle Biosciences is currently generating about 0.06 per unit of risk. If you would invest  150.00  in C4 Therapeutics on May 13, 2025 and sell it today you would earn a total of  100.00  from holding C4 Therapeutics or generate 66.67% return on investment over 90 days.

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

C4 Therapeutics  vs.  Castle Biosciences

C4 Therapeutics

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in C4 Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, C4 Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Castle Biosciences

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Castle Biosciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Castle Biosciences disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C4 Therapeutics and Castle Biosciences

The main advantage of trading using opposite C4 Therapeutics and Castle Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C4 Therapeutics 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 C4 Therapeutics 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.