Correlation Between Ginkgo Bioworks and BitFrontier Capital

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

Diversification Opportunities for Ginkgo Bioworks and BitFrontier Capital

0.32

Correlation Coefficient

Ginkgo Bioworks  BitFrontier Capital

Weak diversification

The 3 months correlation between Ginkgo and BitFrontier is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ginkgo Bioworks Holdings and BitFrontier Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitFrontier Capital 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 BitFrontier Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitFrontier Capital has no effect on the direction of Ginkgo Bioworks i.e., Ginkgo Bioworks and BitFrontier Capital go up and down completely randomly.

Pair Corralation between Ginkgo Bioworks and BitFrontier Capital

Considering the 90-day investment horizon Ginkgo Bioworks Holdings is expected to under-perform the BitFrontier Capital. But the stock apears to be less risky and, when comparing its historical volatility, Ginkgo Bioworks Holdings is 2.63 times less risky than BitFrontier Capital. The stock trades about -0.04 of its potential returns per unit of risk. The BitFrontier Capital Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.74  in BitFrontier Capital Holdings on January 30, 2024 and sell it today you would lose (0.22) from holding BitFrontier Capital Holdings or give up 29.73% of portfolio value over 90 days.

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

Ginkgo Bioworks Holdings  vs.  BitFrontier Capital Holdings

Ginkgo Bioworks Holdings

Risk-Adjusted Performance

0 of 100

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.

BitFrontier Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BitFrontier Capital Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, BitFrontier Capital demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ginkgo Bioworks and BitFrontier Capital

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

The idea behind Ginkgo Bioworks Holdings and BitFrontier Capital 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.