Correlation Between Eagle Pharmaceuticals and Ginkgo Bioworks

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

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

Diversification Opportunities for Eagle Pharmaceuticals and Ginkgo Bioworks

0.83

Correlation Coefficient

Eagle Pharmaceuticals  Ginkgo Bioworks

Very poor diversification

The 3 months correlation between Eagle and Ginkgo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Pharmaceuticals 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 Eagle Pharmaceuticals 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 Eagle Pharmaceuticals 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 Eagle Pharmaceuticals i.e., Eagle Pharmaceuticals and Ginkgo Bioworks go up and down completely randomly.

Pair Corralation between Eagle Pharmaceuticals and Ginkgo Bioworks

Given the investment horizon of 90 days Eagle Pharmaceuticals is expected to generate 0.43 times more return on investment than Ginkgo Bioworks. However, Eagle Pharmaceuticals is 2.31 times less risky than Ginkgo Bioworks. It trades about -0.04 of its potential returns per unit of risk. Ginkgo Bioworks Holdings is currently generating about -0.05 per unit of risk. If you would invest  455.00  in Eagle Pharmaceuticals on February 22, 2024 and sell it today you would lose (18.00) from holding Eagle Pharmaceuticals or give up 3.96% of portfolio value over 90 days.

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

Eagle Pharmaceuticals  vs.  Ginkgo Bioworks Holdings

Eagle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Eagle Pharmaceuticals and Ginkgo Bioworks

The main advantage of trading using opposite Eagle Pharmaceuticals and Ginkgo Bioworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Pharmaceuticals 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 Eagle Pharmaceuticals 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 Stocks Directory module to find actively traded stocks across global markets.