Hedge and mutual fund portfolio management software company, Alpha Theory™, announces their pioneering Risk-Adjusted Return Calculator located on their website: www.AlphaTheory.com/Calculator.
Charlotte, NC, September 09, 2009 — Alpha Theory™ recently introduced the first ever calculator that produces an Estimated Risk Adjusted Return for any individual asset. This value lays the groundwork for every important portfolio decision an investment firm will make. The Risk-Adjusted Return calculation is the most effective way to measure investment quality. All research can be distilled down into the elements of potential profit, downside risk, and probability of each coming true. The use of Risk-Adjusted Return in portfolio construction reduces risk by decreasing position size when an asset has greater downside and increasing return by maximizing the portfolio’s overall Risk-Adjusted Return.
The Alpha Theory™ Risk-Adjusted Return (RAR) calculator can be found at www.AlphaTheory.com/Calculator. Begin by entering a stock ticker, the calculator provides an Estimated Risk-Adjusted Return using market metrics that you can use to show if the market-bias is positive or negative. This Estimated RAR starts by deriving price targets using an average of 52-week high and low and 1-year annualized volatility implied prices. Then, the Calculator derives probabilities by averaging the option-market implied and normal distribution implied probabilities of the price targets being achieved (for more detail on these calculations click on the Calculator Instructions at www.AlphaTheory.com/Calculator). The Alpha Theory™ Estimated RAR is a great first step in any investment process.
The next step is to customize with your own research. Alpha Theory™ allows you to override the estimates with your own assumptions to truly appreciate the stock’s impact on your portfolio. Risk-Adjusted Return is the foundation of every investment decision and is imperative in ensuring that an asset’s position size is in-line with your fundamental research.
“Calculating Risk-Adjusted Return is the most important step a firm can take to improve their investment process,” says Cameron Hight, President and CEO of Alpha Theory™. “The hard part is getting started and the Alpha Theory™ Calculator makes it much easier by providing the foundation of our ground-breaking application to the entire investment community.”
About Alpha Theory™:
Alpha Theory™, the investment industry’s leading Fundamental Portfolio Management Platform, is the premier solution used by hedge and mutual fund portfolio managers to develop an efficient portfolio using the concept of risk-adjusted return. Alpha Theory™ leverages research and instinct to build a repeatable system for ensuring that position size matches the firm’s estimate of idea quality. For further information, please visit www.AlphaTheory.com, our blog at blog.AlphaTheory.com or our demo at www.AlphaTheory.com/demo.
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Press Contact:
Telitha Causey
Vice President, Marketing
Alpha Theory™
Charlotte, NC
phone: (704) 307-2914 x207
fax: (877) 854-7489
[email protected]
http://www.AlphaTheory.com
