Correlation Between Australian Vanadium and Alpha Lithium

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

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

Diversification Opportunities for Australian Vanadium and Alpha Lithium

0.0

Correlation Coefficient

Australian Vanadium  Alpha Lithium

Pay attention - limited upside

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

Pair Corralation between Australian Vanadium and Alpha Lithium

If you would invest  0.82  in Australian Vanadium Limited on December 21, 2024 and sell it today you would earn a total of  0.20  from holding Australian Vanadium Limited or generate 24.39% return on investment over 90 days.

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

Australian Vanadium Limited  vs.  Alpha Lithium Corp

Australian Vanadium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Vanadium Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Australian Vanadium reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Australian Vanadium and Alpha Lithium

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

The idea behind Australian Vanadium Limited and Alpha 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.