Correlation Between Ginkgo Bioworks and Cabaletta Bio

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

By analyzing existing cross correlation between Ginkgo Bioworks Holdings and Cabaletta Bio, you can compare the effects of market volatilities on Ginkgo Bioworks and Cabaletta Bio 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 Ginkgo Bioworks with a short position of Cabaletta Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ginkgo Bioworks and Cabaletta Bio.

Diversification Opportunities for Ginkgo Bioworks and Cabaletta Bio

0.74

Correlation Coefficient

Ginkgo Bioworks  Cabaletta Bio

Poor diversification

The 3 months correlation between Ginkgo and Cabaletta is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ginkgo Bioworks Holdings and Cabaletta Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabaletta Bio and Ginkgo Bioworks 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 Ginkgo Bioworks Holdings are associated (or correlated) with Cabaletta Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabaletta Bio has no effect on the direction of Ginkgo Bioworks i.e., Ginkgo Bioworks and Cabaletta Bio go up and down completely randomly.

Pair Corralation between Ginkgo Bioworks and Cabaletta Bio

Considering the 90-day investment horizon Ginkgo Bioworks Holdings is expected to generate 1.07 times more return on investment than Cabaletta Bio. However, Ginkgo Bioworks is 1.07 times more volatile than Cabaletta Bio. It trades about 0.01 of its potential returns per unit of risk. Cabaletta Bio is currently generating about -0.06 per unit of risk. If you would invest  931.00  in Ginkgo Bioworks Holdings on July 22, 2024 and sell it today you would lose (43.00) from holding Ginkgo Bioworks Holdings or give up 4.62% of portfolio value over 90 days.

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

Ginkgo Bioworks Holdings  vs.  Cabaletta Bio

Ginkgo Bioworks Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ginkgo Bioworks Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Cabaletta Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabaletta Bio 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 fundamental drivers remain somewhat strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ginkgo Bioworks and Cabaletta Bio

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

The idea behind Ginkgo Bioworks Holdings and Cabaletta Bio 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.