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Finance Investment Strategy Portfolio Management

The Law of All or Nothing

Introduction In probability theory, the Kolmogorov’s zero–one law, named in honour of Andrey Nikolaevich Kolmogorov (yeah, I couldn’t pronounce that either), specifies that a certain type of event, called a tail event, will either almost surely happen or almost surely not happen; that is, the probability of such an event occurring is zero or one. The significance of this law is more pronounced in […]

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Finance Investment Strategy Portfolio Management

Statistical Arbitrage

What is Statistical Arbitrage? This is one of the strategies employed by Hedge Funds and High Frequency Traders, wherein they profit from mispricings in the market. The core idea being, prices of financial securities revert to their long-term historical average value over time (mean-reversion). To shed more light, let’s quickly walk through the mechanics of […]

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Finance Investment Strategy

Sustainability & Investing

Setting the Context: With the rise of collective awareness of the importance of sustainability in our social, corporate and economic actions, Environmental, Social & Corporate Governance (ESG) based Investing has amassed vast popularity. This concept is definitely not a new one and the thought of being more “environmentally-friendly” or “consciousness” has prevailed for decades, however, […]

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Finance Investment Strategy

Derivatives 101

Setting the Context Derivatives are part of the Alternative Investment asset class and provide a very interesting dynamic in hedging investment portfolios. In this week’s article let’s go over “What exactly Derivatives are?”, “What are Forwards, Futures and Options?” and examples of using Forward Contracts and Call Options as hedging instruments. What is a derivative? […]

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Finance Investment Strategy

Hedge Funds 101

Introduction This week, let’s gain a good understanding about “What exactly Hedge Funds are?”, “What they do?” and “Who they cater to?”. Hopefully by the end of this article, you’d associate the term “Hedge Funds” with more than just fancy cars, an elite lifestyle and humungous mansions (that’s what most movies portray right?) Alright, let’s […]

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Finance Investment Strategy

Application of Factor Based Investing

Setting the Context: Just like investors analyse different asset classes to allocate their investments, another style of investing is observing the exposure of the investment portfolio to different factors. Factors are the drivers of return across different asset classes. For example, consider growth of GDP, it’s pretty intuitive that when an economy is performing well, […]

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Finance Investment Strategy

Introduction to Factor Investing

What is Factor Investing? Introduction Factor Investing is an approach wherein the investor focuses on identifying the key drivers that push the different asset-class returns (like stocks or bonds). These drivers could be macro-economic drivers or fundamental drivers. Following Factor Investing would allow an investor to dig deeper into the exposures (think risks) for each […]