Correlation Between Ginkgo Bioworks and Soleno Therapeutics

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

Diversification Opportunities for Ginkgo Bioworks and Soleno Therapeutics

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ginkgo and Soleno is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ginkgo Bioworks Holdings and Soleno Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soleno 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 Soleno Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soleno Therapeutics has no effect on the direction of Ginkgo Bioworks i.e., Ginkgo Bioworks and Soleno Therapeutics go up and down completely randomly.

Pair Corralation between Ginkgo Bioworks and Soleno Therapeutics

Considering the 90-day investment horizon Ginkgo Bioworks Holdings is expected to generate 2.06 times more return on investment than Soleno Therapeutics. However, Ginkgo Bioworks is 2.06 times more volatile than Soleno Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Soleno Therapeutics is currently generating about -0.04 per unit of risk. If you would invest  831.00  in Ginkgo Bioworks Holdings on September 19, 2024 and sell it today you would earn a total of  130.00  from holding Ginkgo Bioworks Holdings or generate 15.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ginkgo Bioworks Holdings  vs.  Soleno Therapeutics

 Performance 
       Timeline  
Ginkgo Bioworks Holdings 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Ginkgo Bioworks Holdings are ranked lower than 5 (%) 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.
Soleno Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Soleno Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Ginkgo Bioworks and Soleno Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ginkgo Bioworks and Soleno Therapeutics

The main advantage of trading using opposite Ginkgo Bioworks and Soleno Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ginkgo Bioworks position performs unexpectedly, Soleno 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 Soleno Therapeutics will offset losses from the drop in Soleno Therapeutics' long position.
The idea behind Ginkgo Bioworks Holdings and Soleno 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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