Correlation Between Ginkgo Bioworks and Cyclo Therapeutics

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

Diversification Opportunities for Ginkgo Bioworks and Cyclo Therapeutics

0.1

Correlation Coefficient

Ginkgo Bioworks  Cyclo Therapeutics

Average diversification

The 3 months correlation between Ginkgo and Cyclo is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ginkgo Bioworks Holdings and Cyclo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclo 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 Cyclo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyclo Therapeutics has no effect on the direction of Ginkgo Bioworks i.e., Ginkgo Bioworks and Cyclo Therapeutics go up and down completely randomly.

Pair Corralation between Ginkgo Bioworks and Cyclo Therapeutics

Considering the 90-day investment horizon Ginkgo Bioworks Holdings is expected to generate 1.37 times more return on investment than Cyclo Therapeutics. However, Ginkgo Bioworks is 1.37 times more volatile than Cyclo Therapeutics. It trades about 0.27 of its potential returns per unit of risk. Cyclo Therapeutics is currently generating about 0.32 per unit of risk. If you would invest  946.00  in Ginkgo Bioworks Holdings on October 24, 2024 and sell it today you would earn a total of  344.00  from holding Ginkgo Bioworks Holdings or generate 36.36% return on investment over 90 days.

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

Ginkgo Bioworks Holdings  vs.  Cyclo Therapeutics

Ginkgo Bioworks Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ginkgo Bioworks Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ginkgo Bioworks sustained solid returns over the last few months and may actually be approaching a breakup point.

Cyclo Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cyclo Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Cyclo Therapeutics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ginkgo Bioworks and Cyclo Therapeutics

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

The idea behind Ginkgo Bioworks Holdings and Cyclo 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.