Correlation Between Alpha Copper and United Lithium

Can any of the company-specific risk be diversified away by investing in both Alpha Copper and United Lithium 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 Alpha Copper and United Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Alpha Copper and United Lithium

0.38

Correlation Coefficient

Alpha Copper  United Lithium

Weak diversification

The 3 months correlation between Alpha and United is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Copper Corp and United Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Lithium Corp and Alpha Copper 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 Alpha Copper Corp are associated (or correlated) with United Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Lithium Corp has no effect on the direction of Alpha Copper i.e., Alpha Copper and United Lithium go up and down completely randomly.

Pair Corralation between Alpha Copper and United Lithium

Assuming the 90 days horizon Alpha Copper Corp is expected to under-perform the United Lithium. But the pink sheet apears to be less risky and, when comparing its historical volatility, Alpha Copper Corp is 1.19 times less risky than United Lithium. The pink sheet trades about 0.0 of its potential returns per unit of risk. The United Lithium Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  50.00  in United Lithium Corp on September 2, 2024 and sell it today you would lose (39.00) from holding United Lithium Corp or give up 78.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Alpha Copper Corp  vs.  United Lithium Corp

Alpha Copper Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Copper Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Alpha Copper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

United Lithium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Alpha Copper and United Lithium

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

The idea behind Alpha Copper Corp and United Lithium Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.