Correlation Between Castle Biosciences and Psychemedics

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

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

Diversification Opportunities for Castle Biosciences and Psychemedics

0.0

Correlation Coefficient

Castle Biosciences  Psychemedics

Pay attention - limited upside

The 3 months correlation between Castle and Psychemedics is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and Psychemedics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Psychemedics 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 Psychemedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Psychemedics has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and Psychemedics go up and down completely randomly.

Pair Corralation between Castle Biosciences and Psychemedics

If you would invest (100.00) in Psychemedics on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Psychemedics or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Castle Biosciences  vs.  Psychemedics

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.

Psychemedics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Psychemedics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Psychemedics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Castle Biosciences and Psychemedics

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

The idea behind Castle Biosciences and Psychemedics 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.