Pie chart for alpha calculation shows the amount of percent assigned to ARR value and ERR value.

A positive alpha value represents that the stock has produced optimal results compared to the threshold value set relative to the benchmark and negative alpha value indicates that stock has failed to reach the minimum optimal threshold required to get better results on the investment.
― Note

Thus, an alpha value that is positive will always be a better solution in modern financial markets.

Modern market alpha

alpha and beta values in finance are used in CAPM (capital asset pricing model) for determining the best case scenario on rate of return of a possession.

Another way of calculating the alpha value is Alpha = ARR – risk free rate – beta value * market risk premium.