Correlation Between Castle Biosciences and Prenetics Global

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

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

Diversification Opportunities for Castle Biosciences and Prenetics Global

-0.49

Correlation Coefficient

Castle Biosciences  Prenetics Global

Very good diversification

The 3 months correlation between Castle and Prenetics is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and Prenetics Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prenetics Global 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 Prenetics Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prenetics Global has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and Prenetics Global go up and down completely randomly.

Pair Corralation between Castle Biosciences and Prenetics Global

Given the investment horizon of 90 days Castle Biosciences is expected to under-perform the Prenetics Global. But the stock apears to be less risky and, when comparing its historical volatility, Castle Biosciences is 1.28 times less risky than Prenetics Global. The stock trades about -0.07 of its potential returns per unit of risk. The Prenetics Global is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  448.00  in Prenetics Global on November 28, 2024 and sell it today you would earn a total of  66.00  from holding Prenetics Global or generate 14.73% 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.  Prenetics Global

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 March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Prenetics Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prenetics Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Prenetics Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Castle Biosciences and Prenetics Global

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

The idea behind Castle Biosciences and Prenetics Global 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..