Correlation Between Erasca and Castle Biosciences

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

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

Diversification Opportunities for Erasca and Castle Biosciences

0.57

Correlation Coefficient

Erasca  Castle Biosciences

Very weak diversification

The 3 months correlation between Erasca and Castle is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Erasca Inc and Castle Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castle Biosciences and Erasca 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 Erasca Inc 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 Erasca i.e., Erasca and Castle Biosciences go up and down completely randomly.

Pair Corralation between Erasca and Castle Biosciences

Given the investment horizon of 90 days Erasca Inc is expected to generate 1.81 times more return on investment than Castle Biosciences. However, Erasca is 1.81 times more volatile than Castle Biosciences. It trades about 0.19 of its potential returns per unit of risk. Castle Biosciences is currently generating about 0.18 per unit of risk. If you would invest  143.00  in Erasca Inc on August 6, 2025 and sell it today you would earn a total of  95.00  from holding Erasca Inc or generate 66.43% return on investment over 90 days.

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

Erasca Inc  vs.  Castle Biosciences

Erasca Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Erasca Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Erasca unveiled solid returns over the last few months and may actually be approaching a breakup point.

Castle Biosciences

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Castle Biosciences are ranked lower than 14 (%) 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 Erasca and Castle Biosciences

The main advantage of trading using opposite Erasca and Castle Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erasca 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 Erasca Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.