Correlation Between Servotronics and CompX International

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

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

Diversification Opportunities for Servotronics and CompX International

0.1

Correlation Coefficient

Servotronics  CompX International

Average diversification

The 3 months correlation between Servotronics and CompX is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Servotronics and CompX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompX International and Servotronics 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 Servotronics are associated (or correlated) with CompX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompX International has no effect on the direction of Servotronics i.e., Servotronics and CompX International go up and down completely randomly.

Pair Corralation between Servotronics and CompX International

Considering the 90-day investment horizon Servotronics is expected to generate 12.74 times more return on investment than CompX International. However, Servotronics is 12.74 times more volatile than CompX International. It trades about 0.18 of its potential returns per unit of risk. CompX International is currently generating about 0.04 per unit of risk. If you would invest  1,047  in Servotronics on May 13, 2025 and sell it today you would earn a total of  3,647  from holding Servotronics or generate 348.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	58.06%
Values	Daily Returns

Servotronics  vs.  CompX International

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.

CompX International

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in CompX International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, CompX International may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Servotronics and CompX International

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

The idea behind Servotronics and CompX International 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.