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Risk is the possibility of permanent loss of capital. In trading and investing in markets, risk is unavoidable and the best one can do is to manage it. The objective is to monitor and manage the capital at risk of each trade individually and the capital at risk of all trades collectively on a real-time basis.
Our approach is influenced by our strong risk management backgrounds. We empower our clients via quantitative and qualitative risk monitoring to understand the trade-offs between performance, risk and liquidity and to have better control of their investments.
Risk management is embedded into our investment process, starting with individual positions through to our portfolio construction process, providing a systematic and integrated risk management approach. Risk management depends on the objective behind a particular trade or opportunity. The key assumption underlying the subjective distribution of outcomes must be clearly identified. The risk question “what if the trade is wrong (or goes)?” must have a satisfactory answer in isolation and the worst-case sample path being acceptable.
We manage risk through applying limits on position size, defined stop loss, using similar assets to hedge risk exposures and the use of derivatives.