Quant Hedge Funds come in all shapes and sizes, from small firms with a handful of employees to international funds with a presence on three continents. A larger asset base does not always imply a larger number of employees; rather, the size of a Hedge Fund’s staff is likely to be determined by the number of strategies it employs. Quant Hedge Funds does not involve into an unhedged long strategy of individual stock picking, rather than works upon equity or some fixed income source. For more you can find quantitative hedge fund strategies here.
There are basic two general categories for quantitative hedge fund which are relative value strategies and other one is directional strategies. Both strategies make extensive use of computer models and statistical software. Relative Value strategies seek to profit from predictable pricing relationships among multiple assets. Whereas in the case of directional strategies, there is workings based upon market trends which gives indication for the securities momentum. Other quantitative trading approaches that do not fit neatly into either Relative Value or Directional strategies are:
- High-Frequency Trading, in which traders attempt to profit from price differences across multiple platforms by making numerous trades throughout the day.
- Managed Volatility strategies use futures and forward contracts to generate low but stable returns, dynamically increasing or decreasing the number of contracts as the underlying volatility of the stock, bond, and other markets shifts. Managed Volatility Strategies have grown in popularity in recent years as a result of recent market volatility in both the stock and bond markets.
Now lets us discuss the investment strategies that are offered by our platform.
This is a long-only equity strategy which works upon a proprietary quantitative process in the identification of trending stocks as price .It constructs a portfolio of these stocks systematically and applies a risk management framework to this portfolio. In their absence, such as during market downturns, it preserves capital by increasing cash allocation.
K2 selects stocks using a combination of behavioral finance and traditional valuation techniques. It employs a proprietary valuation method based on normalized free cash flow as well as a behavioral finance model that incorporates momentum.
Kilimanjaro strategy is a neutral market strategy which benefits with commodity market. This strategy invests in highly liquid futures contracts across the commodity spectrum including Crude Oil, Sugar, Copper, and Gold.
Three fully automated and complementary systems are used by Olympus. One profited from extreme movements in the US equity index, another used predicted market changes implied volatility to trade VIX futures algorithmically, and a hybrid that aimed to be volatility-neutral.
- Victory Peak
Victory Peak’s various systems compete for capital, focusing on compound annual return while attempting to minimize drawdown. As the name suggest this strategy is designed for identification of market behaviour and thus diving capital ensuring highest returns based upon mathematical calculations.
Therefore these are the data-driven types of strategies for a quantitative hedge funds to create revenue and financial freedom.