Correlation Between Erayak Power and Servotronics

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

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

Diversification Opportunities for Erayak Power and Servotronics

-0.68

Correlation Coefficient

Erayak Power  Servotronics

Excellent diversification

The 3 months correlation between Erayak and Servotronics is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Erayak Power Solution and Servotronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Servotronics and Erayak Power 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 Erayak Power Solution 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 Erayak Power i.e., Erayak Power and Servotronics go up and down completely randomly.

Pair Corralation between Erayak Power and Servotronics

Given the investment horizon of 90 days Erayak Power Solution is expected to under-perform the Servotronics. In addition to that, Erayak Power is 4.02 times more volatile than Servotronics. It trades about -0.08 of its total potential returns per unit of risk. Servotronics is currently generating about 0.2 per unit of volatility. 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 Against
Strength	Weak
Accuracy	41.94%
Values	Daily Returns

Erayak Power Solution  vs.  Servotronics

Erayak Power Solution

Risk-Adjusted Performance

Weakest

Over the last 90 days Erayak Power Solution has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 Erayak Power and Servotronics

The main advantage of trading using opposite Erayak Power and Servotronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erayak Power 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 Erayak Power Solution 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.