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Risk & Portfolio Management

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Risk & Portfolio Management

Alpha

The return earned above what an asset's risk exposure would have predicted.

Alpha = Actual Return - [Risk-Free Rate + Beta x (Market Return - Risk-Free Rate)] % Risk & Portfolio Management

Asset Allocation

The division of a portfolio between asset classes such as equity, debt, gold and cash.

Test: target weights are set per asset class and the portfolio is managed to those weights over time % Risk & Portfolio Management

Averaging Down

Buying more of a holding after its price has fallen, reducing the average cost per unit.

New Average Cost = (Original Quantity x Original Price + New Quantity x New Price) / Total Quantity ₹