Correlation Between Food Life and AGF Management

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

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

Diversification Opportunities for Food Life and AGF Management

0.71

Correlation Coefficient

Food Life  AGF Management

Poor diversification

The 3 months correlation between Food and AGF is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Food Life 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 Food Life Companies 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 Food Life i.e., Food Life and AGF Management go up and down completely randomly.

Pair Corralation between Food Life and AGF Management

Assuming the 90 days horizon Food Life is expected to generate 1.24 times less return on investment than AGF Management. But when comparing it to its historical volatility, Food Life Companies is 1.18 times less risky than AGF Management. It trades about 0.29 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  496.00  in AGF Management Limited on September 15, 2024 and sell it today you would earn a total of  239.00  from holding AGF Management Limited or generate 48.19% return on investment over 90 days.

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

Food Life Companies  vs.  AGF Management Limited

Food Life Companies

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Food Life Companies are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Food Life reported solid returns over the last few months and may actually be approaching a breakup point.

AGF Management

Risk-Adjusted Performance

23 of 100

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. Despite nearly fragile basic indicators, AGF Management reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Food Life and AGF Management

The main advantage of trading using opposite Food Life and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life 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 Food Life Companies 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.