Correlation Between Intouch Holdings and AGF Management

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

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

Diversification Opportunities for Intouch Holdings and AGF Management

0.38

Correlation Coefficient

Intouch Holdings  AGF Management

Weak diversification

The 3 months correlation between Intouch and AGF is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Intouch Holdings PCL and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Intouch Holdings 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 Intouch Holdings PCL 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 Intouch Holdings i.e., Intouch Holdings and AGF Management go up and down completely randomly.

Pair Corralation between Intouch Holdings and AGF Management

Assuming the 90 days trading horizon Intouch Holdings is expected to generate 2.0 times less return on investment than AGF Management. But when comparing it to its historical volatility, Intouch Holdings PCL is 1.13 times less risky than AGF Management. It trades about 0.03 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  425.00  in AGF Management Limited on September 30, 2024 and sell it today you would earn a total of  280.00  from holding AGF Management Limited or generate 65.88% return on investment over 90 days.

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

Intouch Holdings PCL  vs.  AGF Management Limited

Intouch Holdings PCL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intouch Holdings PCL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Intouch Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AGF Management

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 14 (%) 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 Intouch Holdings and AGF Management

The main advantage of trading using opposite Intouch Holdings and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intouch Holdings 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 Intouch Holdings PCL 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.