How do you recognise a good investment strategy

The Sharpe ratio is a well-known and well-reputed measure of risk-adjusted return on an investment or portfolio. It was developed by the economist William Sharpe. The Sharpe ratio can be used to evaluate the total performance of an aggregate investment portfolio or the performance of an individual stock. The Sharpe ratio indicates how well an equity investment […]

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The January Effect

The January Effect is an investing theory that suggests that the performance of the stock market in the month of January can be used to predict the performance of the stock market for the rest of the year. According to the theory – first posited by Yale Hirsch in 1972 – if the stock market

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Backtesting a strategy

What is Backtesting? Backtesting involves applying a strategy or predictive model to historical data to determine its accuracy. It can be used to test and compare the viability of trading strategies so traders can employ and tweak successful strategies. Summary How Backtesting Works Analysts use backtesting as a way to test and compare various trading techniques

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Managing Portfolio Risk

Share markets have endured a tumultuous start to the year, with the war in Ukraine, lockdowns in China and inflation anxieties relegating COVID-19 news flow to the back pages. In this environment, timing when markets will reach their nadir becomes notoriously difficult to achieve and we implore investors to overcome the temptation to make hasty

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Managing market volatility with alternative hedging strategies

In the past, the choice to maintain an investment portfolio of 60 per cent equities and 40 per cent bonds was a prudent one. This distribution, which allowed for diversification between these two types of assets, has long been the standard. But today, with inflation at 40-year highs and volatility seemingly here to stay, this

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What is Quantitative Investing?

Quantitative analysis (QA) in finance is an approach that emphasizes mathematical and statistical analysis to help determine the value of a financial asset, such as a stock or option. Quantitative trading analysts (also known as “quants“) use a variety of data—including historical investment and stock market data—to develop trading algorithms and computer models. The information generated

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