Correlation Between Castle Biosciences and Azenta

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

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

Diversification Opportunities for Castle Biosciences and Azenta

-0.47

Correlation Coefficient

Castle Biosciences  Azenta

Very good diversification

The 3 months correlation between Castle and Azenta is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and Azenta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azenta Inc 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 Azenta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azenta Inc has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and Azenta go up and down completely randomly.

Pair Corralation between Castle Biosciences and Azenta

Given the investment horizon of 90 days Castle Biosciences is expected to generate 1.81 times more return on investment than Azenta. However, Castle Biosciences is 1.81 times more volatile than Azenta Inc. It trades about 0.03 of its potential returns per unit of risk. Azenta Inc is currently generating about 0.01 per unit of risk. If you would invest  2,700  in Castle Biosciences on October 12, 2024 and sell it today you would earn a total of  325.00  from holding Castle Biosciences or generate 12.04% return on investment over 90 days.

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

Castle Biosciences  vs.  Azenta Inc

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.

Azenta Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Azenta Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Azenta sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Castle Biosciences and Azenta

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

The idea behind Castle Biosciences and Azenta Inc 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .