Correlation Between Castle Biosciences and Fulgent Genetics

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

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

Diversification Opportunities for Castle Biosciences and Fulgent Genetics

0.37

Correlation Coefficient

Castle Biosciences  Fulgent Genetics

Weak diversification

The 3 months correlation between Castle and Fulgent is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and Fulgent Genetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulgent Genetics 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 Fulgent Genetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulgent Genetics has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and Fulgent Genetics go up and down completely randomly.

Pair Corralation between Castle Biosciences and Fulgent Genetics

Given the investment horizon of 90 days Castle Biosciences is expected to under-perform the Fulgent Genetics. In addition to that, Castle Biosciences is 1.43 times more volatile than Fulgent Genetics. It trades about -0.12 of its total potential returns per unit of risk. Fulgent Genetics is currently generating about -0.05 per unit of volatility. If you would invest  1,859  in Fulgent Genetics on December 21, 2024 and sell it today you would lose (170.00) from holding Fulgent Genetics or give up 9.14% of portfolio value over 90 days.

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

Castle Biosciences  vs.  Fulgent Genetics

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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Fulgent Genetics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fulgent Genetics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Castle Biosciences and Fulgent Genetics

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

The idea behind Castle Biosciences and Fulgent Genetics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.