Correlation Between Castle Biosciences and 23Andme Holding

Can any of the company-specific risk be diversified away by investing in both Castle Biosciences and 23Andme Holding 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 23Andme Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Castle Biosciences and 23Andme Holding Co, you can compare the effects of market volatilities on Castle Biosciences and 23Andme Holding 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 23Andme Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castle Biosciences and 23Andme Holding.

Diversification Opportunities for Castle Biosciences and 23Andme Holding

-0.17

Correlation Coefficient

Castle Biosciences  23Andme Holding

Good diversification

The 3 months correlation between Castle and 23Andme is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and 23Andme Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 23Andme Holding 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 23Andme Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 23Andme Holding has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and 23Andme Holding go up and down completely randomly.

Pair Corralation between Castle Biosciences and 23Andme Holding

Given the investment horizon of 90 days Castle Biosciences is expected to generate 0.61 times more return on investment than 23Andme Holding. However, Castle Biosciences is 1.63 times less risky than 23Andme Holding. It trades about 0.06 of its potential returns per unit of risk. 23Andme Holding Co is currently generating about -0.07 per unit of risk. If you would invest  1,670  in Castle Biosciences on September 12, 2024 and sell it today you would earn a total of  1,293  from holding Castle Biosciences or generate 77.43% return on investment over 90 days.

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

Castle Biosciences  vs.  23Andme Holding Co

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 quite persistent basic indicators, Castle Biosciences is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

23Andme Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 23Andme Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Castle Biosciences and 23Andme Holding

The main advantage of trading using opposite Castle Biosciences and 23Andme Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castle Biosciences position performs unexpectedly, 23Andme Holding 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 23Andme Holding will offset losses from the drop in 23Andme Holding's long position.

The idea behind Castle Biosciences and 23Andme Holding Co 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 Commodity Directory module to find actively traded commodities issued by global exchanges.