Trading & Investment Strategies

  • Portfolio Trading Strategies
    • Analysis of "Good" and "Bad" Portfolios

      Here You can find an applied example of constructing an effective portfolio regardless of market conditions and global economic factors. You can learn how to balance investments as well as optimize them based on absolute, relative values as well as quantitative performance including such indicators as Return, Standard Deviation and Sharpie Ratio.

    • Portfolio Optimization through GeWorko Method (Part 1)

      It is challenging to compile an optimal structure of assets in a portfolio. On the one hand, much depends on the parameters of the assets, included in the portfolio and on the other hand, on investor’s individual preferences and restrictions. However, modern financial theory and new method of analysis and trading – GeWorko, substantially simplifies that process. Here is an example of a 6 stock portfolio optimization.

    • Portfolio Optimization through GeWorko Method (Part 2)

      Current article carries on the portfolio optimization process focusing on increasing expected return of the portfolio. Consequently, the optimized portfolio is one of higher risk to yield higher returns. As a result there are several portfolios with varying risk and return ratio. Investors are free to choose based on the degree of risk tolerance.

    • Constructing and Analyzing Stock Portfolios

      In order to apply GeWorko method in practice we offer you to use a new generation trading-analytical platform NetTradeX. Through it you will be able to create personal composite instruments GeWorko in an easy and quick way, to get price chart instantly and to use a wide range of technical analysis tools for predicting the price of the created instruments.

    • Portfolio Diversification with GeWorko Method

      Modern portfolio theory suggests significant benefits from diversification. Using GeWorko method toolset we would like to show how exactly an investor benefits from diversification. For this example we have chosen two well-known securities included in the index Dow Jones Industrial Average.

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  • Spread Trading Strategies
    • Comparing Stock Indices. DAX against CAC40

      Eurozone consists of nearly two dozens of countries, each having its own economic characteristics. The sovereign debt crisis, also known as European crisis, has brought down stock markets of all the countries. However, it is logical that the reaction could not be quantitatively the same everywhere. In this article we will try to investigate the behavior of the major German index DAX and the major French index CAC40, to compare their dynamics in order to determine the relative pace of recovery of each of them from 2009 to 2013.

    • Stock Market against Precious Metals. Which is Stronger?

      It is well known that financial markets are cyclical in nature, with investment capital flowing from gold and silver to "paper" assets and vice versa. Investors worldwide prefer to keep their funds in the form of precious metals when the state of an economy is poor: during crises, wars and defaults, when there is no trust in the stock market.

    • GeWorko Method in the Framework of Pair Trading

      Spread Trading also known as Pair Trading is a relatively new trading technology that has become popular among private investors in the mid- 1990s. Currently, spread trading is a popular tool among traders who have discovered it as a smart way to make profit. Spread Trading is a strategy that allows the trader to use anomalies, as well as fairly strong differences between prices of two stocks or baskets, while maintaining relative neutrality towards the market fluctuations.

    • [PCI] Financial arbitrage

      This product is based on relative fundamental analysis of US financial institutions: Bank of America (BA), Citigroup (C), Bank of New York (BK), Goldman Sachs (GS), JP Morgan (JPM), Morgan Stanley (MS). Every institution is a big bank-issuer, the stocks of which trade on exchanges NYSE/NASDAQ. The main financial indicators from financial reports (profitability, revenue, book value of stocks) are of limited relative value – they differ significantly from industry to industry. These indicators can be used for conducting objective valuations for only issuers belonging to the same industry. This product is based on the analysis of the financial sector of the USA.

    • [PCI] Energy arbitrage

      This product is based on relative fundamental analysis of six global energy companies: British Petroleum (BP), ExxonMobil (XOM), Total (TOT), Petrobras (PBR), Chevron (CVX), Occidental Petroleum (OXY). Each company is involved in gas and oil production all over the world and is a major issuer, stocks of which are traded on NYSE.

    • [IP] DJI Hedge

      To build a portfolio the US Dow Jones (DJI) components were used. The instrument is created by opening opposite positions on competing companies stocks. The shares with the best risk/return ratio (long position) are compared to the least attractive ones of the rivals (short position). Portfolio weights are optimized in order to reduce the correlation with the market indices (hedging) which makes it possible to limit economic risks of U.S. (recessions, crises, speculative market crashes etc.).

    • [IP] DAX Hedge

      To build a portfolio the German DAX (GER30) components were used. The instrument is created by opening opposite positions on competing companies stocks. The shares with the best risk/return ratio (long position) are compared to the least attractive ones of the rivals (short position). Portfolio weights are optimized in order to reduce the correlation with the market index (hedging) which makes it possible to limit economic risks of Germany and EU.

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