THE 4 QUADRANT APPROACH
Our proprietary Alternative investment Portfolio, provides clients with the ability to generate Alpha over the short to medium term, combining various strategies to diversify the risk within one investment portfolio.
Positioning clients into profitable strategies during various market types with the objective of generating Alpha.
Types of Markets
If one breaks the market down into its core elements they consist of:
- Bullish moves
- Bearish moves
- Consolidating moves (Side-ways)
We have gone on to define strategies to achieve the most favorable profit factors and success rate over the short and medium term.
What is quantitative analysis?
Quantitative analysis is a technique using mathematical and statistical modelling, measurement, research and history to understand behavioral trends and to provide the ability of forecasting more accurately.
What is qualitative analysis?
Qualitative analysis allows us to use subjective judgment to analyze the market. Adding the human element to assist in investment decisions.
Our 4 Quadrant investment process
We have incorporated the most profitable strategies over the last 15 years, to establish a winning universe of stocks with defined timing, fundamental and technical parameters to ensure robustness.
Within every major quadrant we run multiple strategies, which have been stress tested, back tested, optimized and walked forward in order to be robust across multiple markets.
- From a Timing perspective this has allowed us to understand when the most favorable time to enter and exit out of various positions by following the defined strategies.
- From a Fundamental perspective we have found the best results come from the top listed companies on the FTSE, JSE, Nasdaq and S&P. These are also the most liquid stocks listed on their respective exchanges.
- From a Technical perspective, this allows us to time the market better and manage our risk efficiently, while implementing trading strategies that have a positive expectancy to deliver consistent returns.
Why bringing in both is important?
Incorporating both qualitative and quantitative strategies, we have brought the best of both worlds, creating better certainty in our investment decisions and outcomes.
Our Quadrant comprises of 4 strategies.
Identifying securities that have been mispriced in the short to medium term using a blend of strategies in order to profit as stocks revert back to their mean.
- Long only strategy
- Holding period between 9 and 28 days
- Use of Derivatives and options for efficiency
Price continuation or trend following, buying securities that continue with momentum and attempting to capture as much of the move as possible.
- Long only strategy
- Medium-term in nature
- Looking to buy securities that are trending
Being market neutral in bullish, bearish and sideways markets. Aiming to remove market risk by being equal weight both long and short within the same sector
- Removing risks by being both long and short the same value i.e. it doesn’t matter which direction the market moves, provided the relationship between the two securities continue to either converge or divergence.
- Medium term in nature
- Diversifying out risk: Commodity, Interest rate, Currency, Market, Sectoral etc
Structural and special opportunities
Running a discretionary model both long and short by using a proprietary filter.
The strategy is market agnostic.
- Using Both Quantitative and Qualitative analysis
- Identifying investment opportunities at extreme infliction points
We aim to diversify our investments to take advantage of different market factors listed above whilst mitigating risk in each quadrant at the same time.
By doing this we achieve diversification within a portfolio by using a blend of multiple investments strategies with sound risk management principles.