Correlation Between Castle Biosciences and Health Catalyst

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

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

Diversification Opportunities for Castle Biosciences and Health Catalyst

0.02

Correlation Coefficient

Castle Biosciences  Health Catalyst

Significant diversification

The 3 months correlation between Castle and Health is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and Health Catalyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Catalyst 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 Health Catalyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Catalyst has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and Health Catalyst go up and down completely randomly.

Pair Corralation between Castle Biosciences and Health Catalyst

Given the investment horizon of 90 days Castle Biosciences is expected to under-perform the Health Catalyst. But the stock apears to be less risky and, when comparing its historical volatility, Castle Biosciences is 1.24 times less risky than Health Catalyst. The stock trades about -0.09 of its potential returns per unit of risk. The Health Catalyst is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  399.00  in Health Catalyst on May 1, 2025 and sell it today you would lose (7.00) from holding Health Catalyst or give up 1.75% of portfolio value over 90 days.

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

Castle Biosciences  vs.  Health Catalyst

Castle Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Castle Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in August 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Health Catalyst

Risk-Adjusted Performance

Very Weak

Over the last 90 days Health Catalyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Health Catalyst 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 Castle Biosciences and Health Catalyst

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

The idea behind Castle Biosciences and Health Catalyst 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.