Correlation Between Custom Truck and Multi Ways

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

By analyzing existing cross correlation between Custom Truck One and Multi Ways Holdings, you can compare the effects of market volatilities on Custom Truck and Multi Ways 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 Custom Truck with a short position of Multi Ways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and Multi Ways.

Diversification Opportunities for Custom Truck and Multi Ways

-0.34

Correlation Coefficient

Custom Truck  Multi Ways

Very good diversification

The 3 months correlation between Custom and Multi is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and Multi Ways Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Ways Holdings and Custom Truck 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 Custom Truck One are associated (or correlated) with Multi Ways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Ways Holdings has no effect on the direction of Custom Truck i.e., Custom Truck and Multi Ways go up and down completely randomly.

Pair Corralation between Custom Truck and Multi Ways

Given the investment horizon of 90 days Custom Truck is expected to generate 2.85 times less return on investment than Multi Ways. But when comparing it to its historical volatility, Custom Truck One is 1.11 times less risky than Multi Ways. It trades about 0.02 of its potential returns per unit of risk. Multi Ways Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Multi Ways Holdings on December 26, 2024 and sell it today you would earn a total of  2.15  from holding Multi Ways Holdings or generate 7.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Custom Truck One  vs.  Multi Ways Holdings

Custom Truck One

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Custom Truck is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Multi Ways Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Ways Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Multi Ways reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Custom Truck and Multi Ways

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

The idea behind Custom Truck One and Multi Ways Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.