Correlation Between Incyte and Ginkgo Bioworks

Can any of the company-specific risk be diversified away by investing in both Incyte and Ginkgo Bioworks 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 Incyte and Ginkgo Bioworks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Incyte and Ginkgo Bioworks Holdings, you can compare the effects of market volatilities on Incyte and Ginkgo Bioworks 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 Incyte with a short position of Ginkgo Bioworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incyte and Ginkgo Bioworks.

Diversification Opportunities for Incyte and Ginkgo Bioworks

0.51

Correlation Coefficient

Incyte  Ginkgo Bioworks

Very weak diversification

The 3 months correlation between Incyte and Ginkgo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Incyte and Ginkgo Bioworks Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ginkgo Bioworks Holdings and Incyte 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 Incyte are associated (or correlated) with Ginkgo Bioworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ginkgo Bioworks Holdings has no effect on the direction of Incyte i.e., Incyte and Ginkgo Bioworks go up and down completely randomly.

Pair Corralation between Incyte and Ginkgo Bioworks

Given the investment horizon of 90 days Incyte is expected to under-perform the Ginkgo Bioworks. But the stock apears to be less risky and, when comparing its historical volatility, Incyte is 3.34 times less risky than Ginkgo Bioworks. The stock trades about -0.07 of its potential returns per unit of risk. The Ginkgo Bioworks Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  874.00  in Ginkgo Bioworks Holdings on December 19, 2024 and sell it today you would lose (126.00) from holding Ginkgo Bioworks Holdings or give up 14.42% of portfolio value over 90 days.

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

Incyte  vs.  Ginkgo Bioworks Holdings

Incyte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Incyte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Incyte and Ginkgo Bioworks

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

The idea behind Incyte and Ginkgo Bioworks 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.