Correlation Between Solusi Sinergi and DCI Indonesia

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

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

Diversification Opportunities for Solusi Sinergi and DCI Indonesia

-0.71

Correlation Coefficient

Solusi Sinergi  DCI Indonesia

Pay attention - limited upside

The 3 months correlation between Solusi and DCI is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Solusi Sinergi Digital 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 Solusi Sinergi 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 Solusi Sinergi Digital 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 Solusi Sinergi i.e., Solusi Sinergi and DCI Indonesia go up and down completely randomly.

Pair Corralation between Solusi Sinergi and DCI Indonesia

Assuming the 90 days trading horizon Solusi Sinergi Digital is expected to generate 1.7 times more return on investment than DCI Indonesia. However, Solusi Sinergi is 1.7 times more volatile than DCI Indonesia Tbk. It trades about 0.2 of its potential returns per unit of risk. DCI Indonesia Tbk is currently generating about -0.19 per unit of risk. If you would invest  26,400  in Solusi Sinergi Digital on September 13, 2024 and sell it today you would earn a total of  15,600  from holding Solusi Sinergi Digital or generate 59.09% return on investment over 90 days.

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

Solusi Sinergi Digital  vs.  DCI Indonesia Tbk

Solusi Sinergi Digital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solusi Sinergi Digital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Solusi Sinergi disclosed solid returns over the last few months and may actually be approaching a breakup point.

DCI Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DCI Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Solusi Sinergi and DCI Indonesia

The main advantage of trading using opposite Solusi Sinergi and DCI Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solusi Sinergi 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 Solusi Sinergi Digital 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.