Correlation Between Sunrise New and Servotronics

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

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

Diversification Opportunities for Sunrise New and Servotronics

-0.27

Correlation Coefficient

Sunrise New  Servotronics

Very good diversification

The 3 months correlation between Sunrise and Servotronics is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sunrise New Energy and Servotronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Servotronics and Sunrise New 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 Sunrise New 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 Sunrise New i.e., Sunrise New and Servotronics go up and down completely randomly.

Pair Corralation between Sunrise New and Servotronics

Given the investment horizon of 90 days Sunrise New Energy is expected to under-perform the Servotronics. But the stock apears to be less risky and, when comparing its historical volatility, Sunrise New Energy is 11.21 times less risky than Servotronics. The stock trades about -0.02 of its potential returns per unit of risk. The Servotronics is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,050  in Servotronics on May 5, 2025 and sell it today you would earn a total of  3,644  from holding Servotronics or generate 347.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Sunrise New Energy  vs.  Servotronics

Sunrise New Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunrise New Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunrise New is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 Sunrise New and Servotronics

The main advantage of trading using opposite Sunrise New and Servotronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunrise New 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 Sunrise New 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.