Correlation Between Information Services and AGF Management

Can any of the company-specific risk be diversified away by investing in both Information Services and AGF Management 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 Information Services and AGF Management into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Information Services and AGF Management Limited, you can compare the effects of market volatilities on Information Services and AGF Management 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 Information Services with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and AGF Management.

Diversification Opportunities for Information Services and AGF Management

0.91

Correlation Coefficient

Information Services  AGF Management

Almost no diversification

The 3 months correlation between Information and AGF is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Information Services and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Information Services 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 Information Services are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Information Services i.e., Information Services and AGF Management go up and down completely randomly.

Pair Corralation between Information Services and AGF Management

Assuming the 90 days trading horizon Information Services is expected to generate 1.52 times less return on investment than AGF Management. But when comparing it to its historical volatility, Information Services is 1.27 times less risky than AGF Management. It trades about 0.25 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  910.00  in AGF Management Limited on April 16, 2025 and sell it today you would earn a total of  359.00  from holding AGF Management Limited or generate 39.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Information Services  vs.  AGF Management Limited

Information Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Information Services displayed solid returns over the last few months and may actually be approaching a breakup point.

AGF Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, AGF Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Information Services and AGF Management

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

The idea behind Information Services and AGF Management Limited 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.