Correlation Between Ginkgo Bioworks and Sonnet Biotherapeutics

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

Diversification Opportunities for Ginkgo Bioworks and Sonnet Biotherapeutics

-0.4

Correlation Coefficient

Ginkgo Bioworks  Sonnet Biotherapeutics

Very good diversification

The 3 months correlation between Ginkgo and Sonnet is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ginkgo Bioworks Holdings and Sonnet Biotherapeutics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonnet Biotherapeutics 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 Sonnet Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonnet Biotherapeutics has no effect on the direction of Ginkgo Bioworks i.e., Ginkgo Bioworks and Sonnet Biotherapeutics go up and down completely randomly.

Pair Corralation between Ginkgo Bioworks and Sonnet Biotherapeutics

Considering the 90-day investment horizon Ginkgo Bioworks Holdings is expected to generate 1.02 times more return on investment than Sonnet Biotherapeutics. However, Ginkgo Bioworks is 1.02 times more volatile than Sonnet Biotherapeutics Holdings. It trades about -0.06 of its potential returns per unit of risk. Sonnet Biotherapeutics Holdings is currently generating about -0.09 per unit of risk. If you would invest  8,360  in Ginkgo Bioworks Holdings on December 2, 2024 and sell it today you would lose (7,536) from holding Ginkgo Bioworks Holdings or give up 90.14% of portfolio value over 90 days.

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

Ginkgo Bioworks Holdings  vs.  Sonnet Biotherapeutics Holding

Ginkgo Bioworks Holdings

Risk-Adjusted Performance

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.

Sonnet Biotherapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sonnet Biotherapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ginkgo Bioworks and Sonnet Biotherapeutics

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

The idea behind Ginkgo Bioworks Holdings and Sonnet Biotherapeutics Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..