Correlation Between AGF Management and Aberdeen International

Can any of the company-specific risk be diversified away by investing in both AGF Management and Aberdeen 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 Aberdeen 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 Aberdeen International, you can compare the effects of market volatilities on AGF Management and Aberdeen 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 Aberdeen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Aberdeen International.

Diversification Opportunities for AGF Management and Aberdeen International

0.2

Correlation Coefficient

AGF Management  Aberdeen International

Modest diversification

The 3 months correlation between AGF and Aberdeen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Aberdeen International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen International 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 Aberdeen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen International has no effect on the direction of AGF Management i.e., AGF Management and Aberdeen International go up and down completely randomly.

Pair Corralation between AGF Management and Aberdeen International

Assuming the 90 days horizon AGF Management Limited is expected to under-perform the Aberdeen International. But the pink sheet apears to be less risky and, when comparing its historical volatility, AGF Management Limited is 7.23 times less risky than Aberdeen International. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Aberdeen International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Aberdeen International on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Aberdeen International or generate 0.0% return on investment over 90 days.

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

AGF Management Limited  vs.  Aberdeen International

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 primary indicators, AGF Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aberdeen International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aberdeen International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGF Management and Aberdeen International

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

The idea behind AGF Management Limited and Aberdeen International 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.