Correlation Between Castle Biosciences and Biodesix

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

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

Diversification Opportunities for Castle Biosciences and Biodesix

0.07

Correlation Coefficient

Castle Biosciences  Biodesix

Significant diversification

The 3 months correlation between Castle and Biodesix is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and Biodesix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodesix 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 Biodesix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodesix has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and Biodesix go up and down completely randomly.

Pair Corralation between Castle Biosciences and Biodesix

Given the investment horizon of 90 days Castle Biosciences is expected to generate 1.09 times more return on investment than Biodesix. However, Castle Biosciences is 1.09 times more volatile than Biodesix. It trades about 0.03 of its potential returns per unit of risk. Biodesix is currently generating about 0.0 per unit of risk. If you would invest  2,354  in Castle Biosciences on September 20, 2024 and sell it today you would earn a total of  355.00  from holding Castle Biosciences or generate 15.08% return on investment over 90 days.

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

Castle Biosciences  vs.  Biodesix

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 latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Biodesix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biodesix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Castle Biosciences and Biodesix

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

The idea behind Castle Biosciences and Biodesix 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.