Correlation Between Alpha Lithium and Decade Resources

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

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

Diversification Opportunities for Alpha Lithium and Decade Resources

-0.63

Correlation Coefficient

Alpha Lithium  Decade Resources

Excellent diversification

The 3 months correlation between Alpha and Decade is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Lithium Corp and Decade Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decade Resources and Alpha Lithium 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 Lithium Corp are associated (or correlated) with Decade Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decade Resources has no effect on the direction of Alpha Lithium i.e., Alpha Lithium and Decade Resources go up and down completely randomly.

Pair Corralation between Alpha Lithium and Decade Resources

Assuming the 90 days horizon Alpha Lithium is expected to generate 4.08 times less return on investment than Decade Resources. But when comparing it to its historical volatility, Alpha Lithium Corp is 5.66 times less risky than Decade Resources. It trades about 0.06 of its potential returns per unit of risk. Decade Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6.99  in Decade Resources on October 11, 2024 and sell it today you would lose (5.40) from holding Decade Resources or give up 77.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	25.81%
Values	Daily Returns

Alpha Lithium Corp  vs.  Decade Resources

Alpha Lithium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Alpha Lithium is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Decade Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Decade Resources 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 nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Alpha Lithium and Decade Resources

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

The idea behind Alpha Lithium Corp and Decade Resources 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.