Correlation Between Teck Resources and Alpha Lithium

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

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

Diversification Opportunities for Teck Resources and Alpha Lithium

-0.02

Correlation Coefficient

Teck Resources  Alpha Lithium

Good diversification

The 3 months correlation between Teck and Alpha is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Teck Resources Ltd and Alpha Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Lithium and Teck Resources 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 Teck Resources Ltd 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 has no effect on the direction of Teck Resources i.e., Teck Resources and Alpha Lithium go up and down completely randomly.

Pair Corralation between Teck Resources and Alpha Lithium

Given the investment horizon of 90 days Teck Resources Ltd is expected to under-perform the Alpha Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Teck Resources Ltd is 8.85 times less risky than Alpha Lithium. The stock trades about -0.05 of its potential returns per unit of risk. The Alpha Lithium is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Alpha Lithium on May 4, 2025 and sell it today you would lose (1.00) from holding Alpha Lithium or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Teck Resources Ltd  vs.  Alpha Lithium

Teck Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teck Resources Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Alpha Lithium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Lithium are ranked lower than 7 (%) 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.

Pair Trading with Teck Resources and Alpha Lithium

The main advantage of trading using opposite Teck Resources and Alpha Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teck Resources 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 Teck Resources Ltd and Alpha Lithium 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.