Correlation Between Ads Tec and Servotronics

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

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

Diversification Opportunities for Ads Tec and Servotronics

-0.27

Correlation Coefficient

Ads Tec  Servotronics

Very good diversification

The 3 months correlation between Ads and Servotronics is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ads Tec Energy and Servotronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Servotronics and Ads Tec 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 Ads Tec Energy are associated (or correlated) with Servotronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Servotronics has no effect on the direction of Ads Tec i.e., Ads Tec and Servotronics go up and down completely randomly.

Pair Corralation between Ads Tec and Servotronics

Given the investment horizon of 90 days Ads Tec Energy is expected to under-perform the Servotronics. But the stock apears to be less risky and, when comparing its historical volatility, Ads Tec Energy is 8.61 times less risky than Servotronics. The stock trades about -0.05 of its potential returns per unit of risk. The Servotronics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,083  in Servotronics on April 25, 2025 and sell it today you would earn a total of  3,611  from holding Servotronics or generate 333.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.42%
Values	Daily Returns

Ads Tec Energy  vs.  Servotronics

Ads Tec Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ads Tec Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Servotronics

Risk-Adjusted Performance

Good

Over the last 90 days Servotronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady basic indicators, Servotronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ads Tec and Servotronics

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

The idea behind Ads Tec Energy and Servotronics 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 Correlations module to find global opportunities by holding instruments from different markets.