Correlation Between Standard Lithium and Alpha Lithium

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

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

Diversification Opportunities for Standard Lithium and Alpha Lithium

0.0

Correlation Coefficient

Standard Lithium  Alpha Lithium

Pay attention - limited upside

The 3 months correlation between Standard and Alpha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Standard Lithium 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 Standard 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 Standard Lithium 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 Standard Lithium i.e., Standard Lithium and Alpha Lithium go up and down completely randomly.

Pair Corralation between Standard Lithium and Alpha Lithium

If you would invest (100.00) in Alpha Lithium Corp on November 28, 2024 and sell it today you would earn a total of  100.00  from holding Alpha Lithium Corp or generate -100.0% return on investment over 90 days.

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

Standard Lithium  vs.  Alpha Lithium Corp

Standard Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standard Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Standard Lithium and Alpha Lithium

The main advantage of trading using opposite Standard Lithium and Alpha Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Lithium 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 Standard Lithium 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.