Correlation Between PT Bukalapak and DCI Indonesia

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

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

Diversification Opportunities for PT Bukalapak and DCI Indonesia

0.48

Correlation Coefficient

PT Bukalapak  DCI Indonesia

Very weak diversification

The 3 months correlation between BUKA and DCI is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PT Bukalapak and DCI Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCI Indonesia Tbk and PT Bukalapak 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 PT Bukalapak are associated (or correlated) with DCI Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCI Indonesia Tbk has no effect on the direction of PT Bukalapak i.e., PT Bukalapak and DCI Indonesia go up and down completely randomly.

Pair Corralation between PT Bukalapak and DCI Indonesia

Assuming the 90 days trading horizon PT Bukalapak is expected to generate 11.15 times less return on investment than DCI Indonesia. But when comparing it to its historical volatility, PT Bukalapak is 2.87 times less risky than DCI Indonesia. It trades about 0.08 of its potential returns per unit of risk. DCI Indonesia Tbk is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  4,210,000  in DCI Indonesia Tbk on December 28, 2024 and sell it today you would earn a total of  12,115,000  from holding DCI Indonesia Tbk or generate 287.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

PT Bukalapak  vs.  DCI Indonesia Tbk

PT Bukalapak

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bukalapak are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Bukalapak disclosed solid returns over the last few months and may actually be approaching a breakup point.

DCI Indonesia Tbk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DCI Indonesia Tbk are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, DCI Indonesia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bukalapak and DCI Indonesia

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

The idea behind PT Bukalapak and DCI Indonesia Tbk 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.