Let me try again... if you hold long and short in the same...

Let me try again... if you hold long and short in the same security, you have no upside anyway... you are hedged, net zero exposure, nada, except you're now lodging collateral and paying borrow fees. I have some experience in this area...

The implementation strategy with baskets and whatnot depends on what you are trying to achieve. Long GXY/short LIT US isolates the bet that GXY is a winner from a representative basket of lithium players. It substantially removes the common risk of the spot price and general sentiment towards lithium stocks. It exposes you to the bet that GXY is more succesful than other lithium stocks, presumably that's what you want. If I think GXY's projects stink, then put it on in the opposite direction, long the etf, short GXY. This kind of strategy and variations thereof are exactly the business of hedge funds (believe me or not).

If you were long Vale and short an iron ore basket, then yes you'd be crying, because if your call on Vale was based on its idiosyncratic features, then that turned out to be wrong. An alternative approach is to make a call about iron ore being good and that Vale is the best way to play the macro call. In that call, you wouldn't short the other iron ore stocks... in my opinion, the better way to play the macro call is to own the basket, but some people prefer to own single names even for these kinds of calls.