Correlation Between Alpha Lithium and REDFLEX HOLDINGS

Can any of the company-specific risk be diversified away by investing in both Alpha Lithium and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS 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 REDFLEX HOLDINGS LTD, you can compare the effects of market volatilities on Alpha Lithium and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Lithium and REDFLEX HOLDINGS.

Diversification Opportunities for Alpha Lithium and REDFLEX HOLDINGS

0.0

Correlation Coefficient

Alpha Lithium  REDFLEX HOLDINGS

Pay attention - limited upside

The 3 months correlation between Alpha and REDFLEX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Lithium Corp and REDFLEX HOLDINGS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDFLEX HOLDINGS LTD 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 REDFLEX HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDFLEX HOLDINGS LTD has no effect on the direction of Alpha Lithium i.e., Alpha Lithium and REDFLEX HOLDINGS go up and down completely randomly.

Pair Corralation between Alpha Lithium and REDFLEX HOLDINGS

If you would invest  2.51  in REDFLEX HOLDINGS LTD on December 29, 2024 and sell it today you would earn a total of  1.89  from holding REDFLEX HOLDINGS LTD or generate 75.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alpha Lithium Corp  vs.  REDFLEX HOLDINGS LTD

Alpha Lithium Corp

Risk-Adjusted Performance

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.

REDFLEX HOLDINGS LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in REDFLEX HOLDINGS LTD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, REDFLEX HOLDINGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Lithium and REDFLEX HOLDINGS

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

The idea behind Alpha Lithium Corp and REDFLEX HOLDINGS LTD 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.