Correlation Between Ginkgo Bioworks and Roivant Sciences

Can any of the company-specific risk be diversified away by investing in both Ginkgo Bioworks and Roivant Sciences 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 Roivant Sciences 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 Roivant Sciences, you can compare the effects of market volatilities on Ginkgo Bioworks and Roivant Sciences 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 Roivant Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ginkgo Bioworks and Roivant Sciences.

Diversification Opportunities for Ginkgo Bioworks and Roivant Sciences

-0.86

Correlation Coefficient

Ginkgo Bioworks  Roivant Sciences

Pay attention - limited upside

The 3 months correlation between Ginkgo and Roivant is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ginkgo Bioworks Holdings and Roivant Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roivant Sciences 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 Roivant Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roivant Sciences has no effect on the direction of Ginkgo Bioworks i.e., Ginkgo Bioworks and Roivant Sciences go up and down completely randomly.

Pair Corralation between Ginkgo Bioworks and Roivant Sciences

Considering the 90-day investment horizon Ginkgo Bioworks Holdings is expected to under-perform the Roivant Sciences. In addition to that, Ginkgo Bioworks is 4.35 times more volatile than Roivant Sciences. It trades about -0.05 of its total potential returns per unit of risk. Roivant Sciences is currently generating about 0.1 per unit of volatility. If you would invest  1,057  in Roivant Sciences on June 27, 2024 and sell it today you would earn a total of  112.00  from holding Roivant Sciences or generate 10.6% return on investment over 90 days.

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

Ginkgo Bioworks Holdings  vs.  Roivant Sciences

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 uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Roivant Sciences

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roivant Sciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Roivant Sciences may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Ginkgo Bioworks and Roivant Sciences

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

The idea behind Ginkgo Bioworks Holdings and Roivant Sciences 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.