Continuous Risk Assessment
We believe that risk cannot and should not be entirely avoided and eliminated. We believe that it is important to identify the sources of risk and return and ensure that the portfolio is not unintentionally overexposed to specific risk factors. We have a proprietary model that enables us to monitor our portfolio risk on a continuous basis.
Stress testing enables our investment and risk management team to quantify the portfolio effects on specific market scenarios rather than relying on intuition. Furthermore, it allows us to proactively predict how changes in specific market prices affect our portfolios in relative and absolute terms.
Performance attribution allows us to identify sources of return of our portfolio and enables us to review the cumulative effect of investment decisions and identify factors that contributes and subtracts from alpha creation. We need to make sure that our performance is not driven by “luck” factors and instead driven by our strategies that we implemented.
We continuously ensure current portfolio performance is consistent with our optimal portfolio model. Periodic portfolio re-balancing is scheduled to align our portfolio risk according to our proprietary risk model.