Correlation Between Ginkgo Bioworks and Krystal Biotech

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

Diversification Opportunities for Ginkgo Bioworks and Krystal Biotech

-0.21

Correlation Coefficient

Ginkgo Bioworks  Krystal Biotech

Very good diversification

The 3 months correlation between Ginkgo and Krystal is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ginkgo Bioworks Holdings and Krystal Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krystal Biotech 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 Krystal Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krystal Biotech has no effect on the direction of Ginkgo Bioworks i.e., Ginkgo Bioworks and Krystal Biotech go up and down completely randomly.

Pair Corralation between Ginkgo Bioworks and Krystal Biotech

Considering the 90-day investment horizon Ginkgo Bioworks Holdings is expected to generate 2.11 times more return on investment than Krystal Biotech. However, Ginkgo Bioworks is 2.11 times more volatile than Krystal Biotech. It trades about 0.07 of its potential returns per unit of risk. Krystal Biotech is currently generating about -0.22 per unit of risk. If you would invest  1,070  in Ginkgo Bioworks Holdings on October 10, 2024 and sell it today you would earn a total of  50.00  from holding Ginkgo Bioworks Holdings or generate 4.67% 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.  Krystal Biotech

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.

Krystal Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ginkgo Bioworks and Krystal Biotech

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

The idea behind Ginkgo Bioworks Holdings and Krystal Biotech 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.