Correlation Between Sera Prognostics and Castle Biosciences

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

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

Diversification Opportunities for Sera Prognostics and Castle Biosciences

0.54

Correlation Coefficient

Sera Prognostics  Castle Biosciences

Very weak diversification

The 3 months correlation between Sera and Castle is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sera Prognostics and Castle Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castle Biosciences and Sera Prognostics 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 Sera Prognostics 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 Sera Prognostics i.e., Sera Prognostics and Castle Biosciences go up and down completely randomly.

Pair Corralation between Sera Prognostics and Castle Biosciences

Given the investment horizon of 90 days Sera Prognostics is expected to generate 2.7 times less return on investment than Castle Biosciences. But when comparing it to its historical volatility, Sera Prognostics is 1.07 times less risky than Castle Biosciences. It trades about 0.05 of its potential returns per unit of risk. Castle Biosciences is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,680  in Castle Biosciences on July 23, 2025 and sell it today you would earn a total of  621.00  from holding Castle Biosciences or generate 36.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Sera Prognostics  vs.  Castle Biosciences

Sera Prognostics

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Sera Prognostics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Sera Prognostics sustained solid returns over the last few months and may actually be approaching a breakup point.

Castle Biosciences

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Castle Biosciences are ranked lower than 9 (%) 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 Sera Prognostics and Castle Biosciences

The main advantage of trading using opposite Sera Prognostics and Castle Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sera Prognostics 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 Sera Prognostics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.