Correlation Between Sotera Health and Castle Biosciences
Can any of the company-specific risk be diversified away by investing in both Sotera Health and Castle Biosciences 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 Sotera Health and Castle Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotera Health Co and Castle Biosciences, you can compare the effects of market volatilities on Sotera Health and Castle Biosciences 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 Sotera Health with a short position of Castle Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotera Health and Castle Biosciences.
Diversification Opportunities for Sotera Health and Castle Biosciences
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sotera and Castle is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sotera Health Co and Castle Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castle Biosciences and Sotera Health 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 Sotera Health Co are associated (or correlated) with Castle Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castle Biosciences has no effect on the direction of Sotera Health i.e., Sotera Health and Castle Biosciences go up and down completely randomly.
Pair Corralation between Sotera Health and Castle Biosciences
Considering the 90-day investment horizon Sotera Health Co is expected to under-perform the Castle Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Sotera Health Co is 1.31 times less risky than Castle Biosciences. The stock trades about -0.31 of its potential returns per unit of risk. The Castle Biosciences is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 3,454 in Castle Biosciences on August 31, 2024 and sell it today you would lose (410.00) from holding Castle Biosciences or give up 11.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sotera Health Co vs. Castle Biosciences
Performance |
| Timeline |
| Sotera Health |
| Castle Biosciences |
Sotera Health and Castle Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotera Health and Castle Biosciences
The main advantage of trading using opposite Sotera Health and Castle Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotera Health position performs unexpectedly, Castle Biosciences 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 Castle Biosciences will offset losses from the drop in Castle Biosciences' long position.| Sotera Health vs. Qiagen NV | Sotera Health vs. Aclaris Therapeutics | Sotera Health vs. Neogen | Sotera Health vs. RadNet Inc |
| Castle Biosciences vs. Caredx Inc | Castle Biosciences vs. Twist Bioscience Corp | Castle Biosciences vs. Biodesix | Castle Biosciences vs. Natera Inc |
Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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