Correlation Between FuelCell Energy and Servotronics

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

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

Diversification Opportunities for FuelCell Energy and Servotronics

-0.06

Correlation Coefficient

FuelCell Energy  Servotronics

Good diversification

The 3 months correlation between FuelCell and Servotronics is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Servotronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Servotronics and FuelCell Energy 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 FuelCell 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 FuelCell Energy i.e., FuelCell Energy and Servotronics go up and down completely randomly.

Pair Corralation between FuelCell Energy and Servotronics

Given the investment horizon of 90 days FuelCell Energy is expected to generate 3.48 times less return on investment than Servotronics. In addition to that, FuelCell Energy is 1.66 times more volatile than Servotronics. It trades about 0.03 of its total potential returns per unit of risk. Servotronics is currently generating about 0.19 per unit of volatility. If you would invest  3,785  in Servotronics on May 21, 2025 and sell it today you would earn a total of  909.00  from holding Servotronics or generate 24.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.18%
Values	Daily Returns

FuelCell Energy  vs.  Servotronics

FuelCell Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FuelCell Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, FuelCell Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 FuelCell Energy and Servotronics

The main advantage of trading using opposite FuelCell Energy and Servotronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy 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 FuelCell 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.