Correlation Between Ginkgo Bioworks and Tempest Therapeutics

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

Diversification Opportunities for Ginkgo Bioworks and Tempest Therapeutics

-0.16

Correlation Coefficient

Ginkgo Bioworks  Tempest Therapeutics

Good diversification

The 3 months correlation between Ginkgo and Tempest is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ginkgo Bioworks Holdings and Tempest Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempest Therapeutics 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 Tempest Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempest Therapeutics has no effect on the direction of Ginkgo Bioworks i.e., Ginkgo Bioworks and Tempest Therapeutics go up and down completely randomly.

Pair Corralation between Ginkgo Bioworks and Tempest Therapeutics

Considering the 90-day investment horizon Ginkgo Bioworks Holdings is expected to generate 0.93 times more return on investment than Tempest Therapeutics. However, Ginkgo Bioworks Holdings is 1.08 times less risky than Tempest Therapeutics. It trades about 0.22 of its potential returns per unit of risk. Tempest Therapeutics is currently generating about 0.05 per unit of risk. If you would invest  728.00  in Ginkgo Bioworks Holdings on August 14, 2024 and sell it today you would earn a total of  148.00  from holding Ginkgo Bioworks Holdings or generate 20.33% return on investment over 90 days.

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

Ginkgo Bioworks Holdings  vs.  Tempest Therapeutics

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 somewhat strong basic indicators, Ginkgo Bioworks is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tempest Therapeutics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Tempest Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tempest Therapeutics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ginkgo Bioworks and Tempest Therapeutics

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

The idea behind Ginkgo Bioworks Holdings and Tempest Therapeutics 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.