Correlation Between AGF Management and Yara International

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

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

Diversification Opportunities for AGF Management and Yara International

-0.14

Correlation Coefficient

AGF Management  Yara International

Good diversification

The 3 months correlation between AGF and Yara is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International ASA and AGF Management 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 AGF Management Limited are associated (or correlated) with Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of AGF Management i.e., AGF Management and Yara International go up and down completely randomly.

Pair Corralation between AGF Management and Yara International

Assuming the 90 days horizon AGF Management Limited is expected to under-perform the Yara International. In addition to that, AGF Management is 1.33 times more volatile than Yara International ASA. It trades about -0.04 of its total potential returns per unit of risk. Yara International ASA is currently generating about 0.15 per unit of volatility. If you would invest  2,531  in Yara International ASA on December 26, 2024 and sell it today you would earn a total of  394.00  from holding Yara International ASA or generate 15.57% return on investment over 90 days.

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

AGF Management Limited  vs.  Yara International ASA

AGF Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGF Management Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AGF Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Yara International ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yara International ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Yara International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGF Management and Yara International

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

The idea behind AGF Management Limited and Yara International ASA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.