Correlation Between Alx Oncology and Caribou Biosciences

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

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

Diversification Opportunities for Alx Oncology and Caribou Biosciences

-0.3

Correlation Coefficient

Alx Oncology  Caribou Biosciences

Very good diversification

The 3 months correlation between Alx and Caribou is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Alx Oncology Holdings and Caribou Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribou Biosciences and Alx Oncology 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 Alx Oncology Holdings are associated (or correlated) with Caribou Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribou Biosciences has no effect on the direction of Alx Oncology i.e., Alx Oncology and Caribou Biosciences go up and down completely randomly.

Pair Corralation between Alx Oncology and Caribou Biosciences

Given the investment horizon of 90 days Alx Oncology Holdings is expected to generate 1.35 times more return on investment than Caribou Biosciences. However, Alx Oncology is 1.35 times more volatile than Caribou Biosciences. It trades about 0.03 of its potential returns per unit of risk. Caribou Biosciences is currently generating about -0.01 per unit of risk. If you would invest  172.00  in Alx Oncology Holdings on October 3, 2024 and sell it today you would lose (5.00) from holding Alx Oncology Holdings or give up 2.91% of portfolio value over 90 days.

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

Alx Oncology Holdings  vs.  Caribou Biosciences

Alx Oncology Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alx Oncology Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Alx Oncology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Caribou Biosciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alx Oncology and Caribou Biosciences

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

The idea behind Alx Oncology Holdings and Caribou Biosciences 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.