Correlation Between Alpha Lithium and Jourdan Resources

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

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

Diversification Opportunities for Alpha Lithium and Jourdan Resources

-0.09

Correlation Coefficient

Alpha Lithium  Jourdan Resources

Good diversification

The 3 months correlation between Alpha and Jourdan is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Lithium and Jourdan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jourdan 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 are associated (or correlated) with Jourdan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jourdan Resources has no effect on the direction of Alpha Lithium i.e., Alpha Lithium and Jourdan Resources go up and down completely randomly.

Pair Corralation between Alpha Lithium and Jourdan Resources

Assuming the 90 days horizon Alpha Lithium is expected to generate 4.64 times less return on investment than Jourdan Resources. But when comparing it to its historical volatility, Alpha Lithium is 1.53 times less risky than Jourdan Resources. It trades about 0.12 of its potential returns per unit of risk. Jourdan Resources is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1.32  in Jourdan Resources on February 20, 2024 and sell it today you would earn a total of  1.23  from holding Jourdan Resources or generate 93.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alpha Lithium  vs.  Jourdan Resources

Alpha Lithium

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Lithium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Alpha Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Jourdan Resources

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Alpha Lithium and Jourdan Resources

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

The idea behind Alpha Lithium and Jourdan 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.