MEASURING ALPHA a Hedge Fund Model Oscillators

MEASURING ALPHA a Hedge Fund Model Oscillators, Last Modified, 2022-03-09

How to measure Alpha when allocating capital to a basket of stocks in a position based trading portfolio.

The use of market oscillation is an effective way to time entering and exiting your positions.The chart above helps us to measure the position of our portfolio relative to the broader market.

In my trading I use this only as a guide, but on an individual stock level, I used the relative position to make trade execution decisions.

This is an incredibly effective way to be disciplined. It is a rule based approach that cannot be overridden by human judgement. The use of these oscillators is therefore a signalling mechanism. Signals in the hedge fund managers models can be based on charts or underlying math built into a Boolean string function, Essentially the market at any point in time can literally be read in English, pre programmed based on the numbers, the chart simply acts a a useful data visualisation of the math.

Of course to rely on the chart and not have an understanding of the intrinsic math is dangerous. The hedge fund managers experience and overall appreciation of the Macro Economic environment is as important as the short term market signal.

This is not about reading charts to understand the market. This is about constructing charts to visualise your math

This approach presupposes that the hedge fund manager has analysed the numbers and determined the rule he or she believes is driving the share price movement, then building a model with charts to better visualise the math.

It is quantitative modelling as apposed to Chartism or Technical Analysis. But there are merits and risks in both of course, but it worth mentioning the distinction.

Please Log In to view this Content

Hello! Looks like you’re enjoying articles OnMyBubble.com. This article is free to read but you haven’t signed up for a free account yet. When you ’create a free account', we remember you, so when you ’Log In', you will always come right back to your personal profile page, with notifications and private messages, whenever someone replies to you. As a member you can follow / friend other members, post messages and comment on those posted by others. Members can even send private messages to individuals and groups.

Professionals and Business owners might also be interested in writing articles or promoting services or products, OnMyBubble.com pages reach readers in 110 countries globally and there are no listing fees for listing your products and services on your Free Online store. You only pay a sales commission if you make a sale on the platform. Your FREE Online Store is created automatically once you signup and a real person will always be available to help you list your products. Our stores are capable of delivering digital downloads so you can sell information products, games, tickets and more.

Advertisers who are fed up paying for non performing promotions on mainstream social media will be interested to know that we operate a strictly Pay for Performance (PPC) Pay Per Click service using bundles. So advertisers can simply decide the value of a click referral and only pay what the referral is worth (subject to negotiation). We operate a PayPerClick Tracking System that "Amortises" the Cost of a Bundle over the Number of Clicks. This ensures Advertisers only ever pay a fair price for clicks or referrals to their site.

For more information you can ’contact us',

---