What is the quantitative portfolio management?

The

quantitative portfolio administration occurs when the investor chooses securities that contain its portfolio based on statistical and numerical data. This data is then brought to models based on past performances and statistical probabilities to determine the best investment elections and the timing of their purchase and sale. Analysts who are in charge of quantitative portfolio management, known as Quants, also judge the level of risk associated with any possible investment unlike potential rewards. While quantitative analysis helps to eliminate psychological problems from investment selection, it may be slow to respond to sudden market shifts. Many people like to make these decisions based on past investment experiences, current events or just their own intestinal feelings. Others believe in the strength of statistical data and its ability to predict future results outside the past and current figures. These people would probably be the most for quantitative administrationportfolios.

While most quantas could deal with choosing one security over another at a certain time, quantitative portfolio management requires an investor's total financial image. As soon as the analyst knows the expected level of return on investor's investor and its acceptable level of risk, then he can start processing the data to achieve the necessary results. Quantitative analysts have the ability to statistically break the portfolio and determine its strong and weak and weak.

The advantage of using the quantitative portfolio administration is that it removes part of the human tendency to the sound decisions of the second guessing. By believing in proven statistical patterns, the investor may have a better chance of returning profits than if he tried to defeat the market himself. While quantitative analysis is not without risk, analysts can definitely point to the results achieved by different mathematical formulas and computer programs, kDYŽ offers the advantages of relying on numbers.

Of course, the disadvantage of quantitative portfolio management is that it requires the investor to give up most of the control he could otherwise have over his capital. The relying to the numbers is fine until the numbers suddenly move. One of the main concerns in quantitative analysis is that it is sometimes slow to respond to occasional marine changes on the market. At the time of modifications, the investor could suffer significant damage to his portfolio.