Correlation Between Rallybio Corp and Alx Oncology

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

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

Diversification Opportunities for Rallybio Corp and Alx Oncology

0.65

Correlation Coefficient

Rallybio Corp  Alx Oncology

Poor diversification

The 3 months correlation between Rallybio and Alx is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Rallybio Corp and Alx Oncology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alx Oncology Holdings and Rallybio Corp 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 Rallybio Corp are associated (or correlated) with Alx Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alx Oncology Holdings has no effect on the direction of Rallybio Corp i.e., Rallybio Corp and Alx Oncology go up and down completely randomly.

Pair Corralation between Rallybio Corp and Alx Oncology

Given the investment horizon of 90 days Rallybio Corp is expected to generate 0.53 times more return on investment than Alx Oncology. However, Rallybio Corp is 1.87 times less risky than Alx Oncology. It trades about 0.02 of its potential returns per unit of risk. Alx Oncology Holdings is currently generating about -0.05 per unit of risk. If you would invest  111.00  in Rallybio Corp on September 4, 2024 and sell it today you would earn a total of  2.00  from holding Rallybio Corp or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Rallybio Corp  vs.  Alx Oncology Holdings

Rallybio Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rallybio Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Rallybio Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Alx Oncology Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alx Oncology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Rallybio Corp and Alx Oncology

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

The idea behind Rallybio Corp and Alx Oncology 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.