Correlation Between Servotronics and Stardust Power

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

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

Diversification Opportunities for Servotronics and Stardust Power

0.49

Correlation Coefficient

Servotronics  Stardust Power

Very weak diversification

The 3 months correlation between Servotronics and Stardust is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Servotronics and Stardust Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stardust Power 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 Stardust Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stardust Power has no effect on the direction of Servotronics i.e., Servotronics and Stardust Power go up and down completely randomly.

Pair Corralation between Servotronics and Stardust Power

Considering the 90-day investment horizon Servotronics is expected to generate 2.9 times more return on investment than Stardust Power. However, Servotronics is 2.9 times more volatile than Stardust Power. It trades about 0.18 of its potential returns per unit of risk. Stardust Power is currently generating about 0.01 per unit of risk. If you would invest  1,050  in Servotronics on May 14, 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 Together
Strength	Weak
Accuracy	56.45%
Values	Daily Returns

Servotronics  vs.  Stardust Power

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.

Stardust Power

Risk-Adjusted Performance

Weakest

Over the last 90 days Stardust Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unfluctuating basic indicators, Stardust Power may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Servotronics and Stardust Power

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

The idea behind Servotronics and Stardust Power 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.