Correlation Between Wir Asia and DCI Indonesia

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

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

Diversification Opportunities for Wir Asia and DCI Indonesia

0.06

Correlation Coefficient

Wir Asia  DCI Indonesia

Significant diversification

The 3 months correlation between Wir and DCI is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wir Asia Tbk 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 Wir Asia 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 Wir Asia Tbk 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 Wir Asia i.e., Wir Asia and DCI Indonesia go up and down completely randomly.

Pair Corralation between Wir Asia and DCI Indonesia

Assuming the 90 days trading horizon Wir Asia is expected to generate 14.31 times less return on investment than DCI Indonesia. But when comparing it to its historical volatility, Wir Asia Tbk is 1.53 times less risky than DCI Indonesia. It trades about 0.03 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	Insignificant
Accuracy	98.33%
Values	Daily Returns

Wir Asia Tbk  vs.  DCI Indonesia Tbk

Wir Asia Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wir Asia Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wir Asia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Wir Asia and DCI Indonesia

The main advantage of trading using opposite Wir Asia and DCI Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wir Asia 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 Wir Asia Tbk 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 CEOs Directory module to screen CEOs from public companies around the world.