Correlation Between Cornerstone Strategic and Servotronics

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

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

Diversification Opportunities for Cornerstone Strategic and Servotronics

0.67

Correlation Coefficient

Cornerstone Strategic  Servotronics

Poor diversification

The 3 months correlation between Cornerstone and Servotronics is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value and Servotronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Servotronics and Cornerstone Strategic 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 Cornerstone Strategic Value 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 Cornerstone Strategic i.e., Cornerstone Strategic and Servotronics go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and Servotronics

Considering the 90-day investment horizon Cornerstone Strategic is expected to generate 4.43 times less return on investment than Servotronics. But when comparing it to its historical volatility, Cornerstone Strategic Value is 6.13 times less risky than Servotronics. It trades about 0.28 of its potential returns per unit of risk. Servotronics is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,789  in Servotronics on May 28, 2025 and sell it today you would earn a total of  905.00  from holding Servotronics or generate 23.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	41.94%
Values	Daily Returns

Cornerstone Strategic Value  vs.  Servotronics

Cornerstone Strategic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Value are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak essential indicators, Cornerstone Strategic displayed solid returns over the last few months and may actually be approaching a breakup point.

Servotronics

Risk-Adjusted Performance

Solid

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 Cornerstone Strategic and Servotronics

The main advantage of trading using opposite Cornerstone Strategic and Servotronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic 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 Cornerstone Strategic Value 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.