  We report the results of AstroSat observations of Cygnus X-2 during February
2016. The source's power density spectrum generated using LAXPC data revealed
the presence of a prominent Quasi-periodic Oscillation (QPO) at $\sim42$ Hz
with broadband continuum noise at lower frequencies at $\sim10$ Hz. The large
effective area of LAXPC at $\gtrsim$30 keV allowed for an unprecedented study
of the energy dependence of the QPO and the broad noise continuum. The
fractional r.m.s increases with energy, and its shape is similar for both the
QPO and the continuum noise, suggesting a common radiative origin. However,
while the QPO exhibits hard time lags, with the high energy photons lagging the
low ones by a few milliseconds, the continuum noise shows the opposite
behavior. The photon spectrum from SXT and LAXPC in $0.7-30$ keV band comprises
the soft component from a disc and a hard Comptonized component from a hot
corona. While the energy dependence of the r.m.s shows that the QPO and the
continuum noise variability are dominated by the Comptonized component, the
change in sign of the time-lag suggests that the dynamic origin of the QPO may
be in the disk while the noise continuum may originate from the corona.
