Correlation Between Alx Oncology and SpringWorks Therapeutics

Can any of the company-specific risk be diversified away by investing in both Alx Oncology and SpringWorks 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 Alx Oncology and SpringWorks Therapeutics 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 SpringWorks Therapeutics, you can compare the effects of market volatilities on Alx Oncology and SpringWorks 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 Alx Oncology with a short position of SpringWorks Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alx Oncology and SpringWorks Therapeutics.

Diversification Opportunities for Alx Oncology and SpringWorks Therapeutics

0.15

Correlation Coefficient

Alx Oncology  SpringWorks Therapeutics

Average diversification

The 3 months correlation between Alx and SpringWorks is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Alx Oncology Holdings and SpringWorks Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpringWorks Therapeutics 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 SpringWorks Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpringWorks Therapeutics has no effect on the direction of Alx Oncology i.e., Alx Oncology and SpringWorks Therapeutics go up and down completely randomly.

Pair Corralation between Alx Oncology and SpringWorks Therapeutics

Given the investment horizon of 90 days Alx Oncology Holdings is expected to generate 38.09 times more return on investment than SpringWorks Therapeutics. However, Alx Oncology is 38.09 times more volatile than SpringWorks Therapeutics. It trades about 0.13 of its potential returns per unit of risk. SpringWorks Therapeutics is currently generating about 0.32 per unit of risk. If you would invest  43.00  in Alx Oncology Holdings on May 19, 2025 and sell it today you would earn a total of  21.00  from holding Alx Oncology Holdings or generate 48.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

Alx Oncology Holdings  vs.  SpringWorks Therapeutics

Alx Oncology Holdings

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Alx Oncology Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Alx Oncology displayed solid returns over the last few months and may actually be approaching a breakup point.

SpringWorks Therapeutics

Risk-Adjusted Performance

Solid

Over the last 90 days SpringWorks Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SpringWorks Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alx Oncology and SpringWorks Therapeutics

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

The idea behind Alx Oncology Holdings and SpringWorks 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .