Correlation Between Castle Biosciences and Trinity Biotech

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

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

Diversification Opportunities for Castle Biosciences and Trinity Biotech

0.62

Correlation Coefficient

Castle Biosciences  Trinity Biotech

Poor diversification

The 3 months correlation between Castle and Trinity is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and Trinity Biotech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Biotech plc 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 Trinity Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Biotech plc has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and Trinity Biotech go up and down completely randomly.

Pair Corralation between Castle Biosciences and Trinity Biotech

Given the investment horizon of 90 days Castle Biosciences is expected to under-perform the Trinity Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Castle Biosciences is 3.03 times less risky than Trinity Biotech. The stock trades about -0.1 of its potential returns per unit of risk. The Trinity Biotech plc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Trinity Biotech plc on December 28, 2024 and sell it today you would lose (24.50) from holding Trinity Biotech plc or give up 27.53% of portfolio value over 90 days.

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

Castle Biosciences  vs.  Trinity Biotech plc

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.

Trinity Biotech plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trinity Biotech plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Trinity Biotech is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Castle Biosciences and Trinity Biotech

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

The idea behind Castle Biosciences and Trinity Biotech plc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.