Correlation Between PT Data and DCI Indonesia

Can any of the company-specific risk be diversified away by investing in both PT Data 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 Data 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 Data Sinergitama and DCI Indonesia Tbk, you can compare the effects of market volatilities on PT Data 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 Data with a short position of DCI Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Data and DCI Indonesia.

Diversification Opportunities for PT Data and DCI Indonesia

0.75

Correlation Coefficient

PT Data  DCI Indonesia

Poor diversification

The 3 months correlation between ELIT and DCI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding PT Data Sinergitama 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 Data 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 Data Sinergitama 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 Data i.e., PT Data and DCI Indonesia go up and down completely randomly.

Pair Corralation between PT Data and DCI Indonesia

Assuming the 90 days trading horizon PT Data is expected to generate 2.4 times less return on investment than DCI Indonesia. In addition to that, PT Data is 1.07 times more volatile than DCI Indonesia Tbk. It trades about 0.12 of its total potential returns per unit of risk. DCI Indonesia Tbk is currently generating about 0.3 per unit of volatility. 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	Significant
Accuracy	98.33%
Values	Daily Returns

PT Data Sinergitama  vs.  DCI Indonesia Tbk

PT Data Sinergitama

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Data Sinergitama are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Data 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 Data and DCI Indonesia

The main advantage of trading using opposite PT Data and DCI Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Data 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 Data Sinergitama 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.