Is Pairs Trading Still Profitable?

Posted on April 26, 2024 By Harbourfront Technologies

Pairs trading involves identifying two related securities, typically stocks, that have historically exhibited a strong correlation in price movements. Traders then look for deviations from this historical relationship, buying the underperforming security while simultaneously selling the outperforming one. The goal is to profit from the convergence of prices back to …

Vertical Analysis vs Horizontal Analysis: What are the Differences, Comparison

Posted on April 24, 2024 By John

Vertical and horizontal analysis provide valuable insights into multiple aspects of a company’s financial performance. However, they differ in the way they help analyze financial statements. What is Vertical Analysis? Vertical analysis (or common-size analysis) is a financial evaluation method focused on dissecting and comparing individual components within financial statements …

Risk Management for Bull Put Spread Strategy

Posted on April 22, 2024 By Harbourfront Technologies

A bull put spread is a type of options strategy used by investors who anticipate a moderate rise or at least stability in the price of the underlying asset. In this strategy, the investor sells a put option with a higher strike price while simultaneously buying a put option with …

Direct Listing: Definition, Advantages, Disadvantages, Meaning, Example, vs. IPO

Posted on April 20, 2024 By John

When it comes to a company going public, there are two main ways to do it: through an initial public offering (IPO) or through direct listing. While IPOs have long been the traditional route for companies looking to become publicly traded, direct listings have gained popularity in recent years. It’s …

A Portfolio Construction Approach Based on Options Implied Density Distributions

Posted on April 18, 2024 By Harbourfront Technologies

An investment portfolio can be constructed by using momentum, minimum-variance, or mean-variance approaches. It involves combining assets in a way that optimizes risk and return. Each approach offers its own trade-offs: momentum strategies may suffer during market reversals, while minimum-variance portfolios may underperform in strongly trending markets. Meanwhile, mean-variance portfolios …

Job Cost Sheet: What It Is, Definition, Usage, Format, Example, Importance

Posted on April 16, 2024 By John

Job costing is crucial for companies as it helps determine the cost of individual jobs or projects, enabling accurate pricing, budgeting, and profitability analysis. An essential document that helps companies is a job cost sheet. What is a Job Cost Sheet? A job cost sheet is a comprehensive document used …

Optimizing Portfolios Based on Hurst Exponent

Posted on April 14, 2024 By Harbourfront Technologies

Portfolio optimization is an important aspect of investment management, aiming to construct portfolios that offer the best risk-return trade-off based on an investor’s objectives and constraints. Various optimization techniques, such as mean-variance optimization, Black-Litterman model, and risk parity, are employed to generate optimal portfolios tailored to different investment goals and …

Flotation Costs: Definition, Formula, Meaning, Calculation, Examples

Posted on April 12, 2024 By John

When it comes to issuing new securities, flotation costs play a major role. It’s important to understand how much capital they will be able to raise from those new securities and how much it will cost them to do so. It’s an important factor that helps businesses determine if issuing …

Blending Low-Volatility with Momentum Anomalies

Posted on April 10, 2024 By Harbourfront Technologies

The low volatility anomaly in the stock market refers to the phenomenon where stocks with lower volatility tend to provide higher risk-adjusted returns compared to their higher volatility counterparts, contrary to traditional financial theories. Various explanations have been proposed for this anomaly, including investor behavioral biases, such as overestimating the …

Lead-Lag Relationship Between Convertible Bonds and The Stock Markets

Posted on April 8, 2024 By Harbourfront Technologies

A convertible bond is a type of security that can be converted into a predetermined number of shares of the issuer’s common stock at certain times during its life. Convertible bonds typically offer lower interest rates compared to regular bonds because they come with the potential for higher returns if …