Financial Risk Modelling

Risk management blends art and science, leveraging both quantitative and qualitative approaches. We bring a meticulous, and often forensic, attention to detail in everything we do.

Quant-Driven Risk Solutions for Dynamic Markets

At 2Cents Capital, we employ advanced strategies, including position sizing, risk management, trade management, and hedging techniques to mitigate risks and enhance performance.

Our approach incorporates quantitative and fundamental analysis, stress testing, and scenario analysis to prepare for market fluctuations.

Through diligent risk assessment and transparent reporting, we keep stakeholders informed and ready to navigate the balance between risk and reward in hedge fund investing

Objectives & Expected Outcome

Our goal is to protect investor capital and optimize portfolio performance through effective risk management.

By managing risks with strong money policies, position sizing, and hedging, we aim to navigate market volatility, enhance resilience, minimize losses, and deliver superior risk-adjusted returns with clear communication to stakeholders

FRM Highlights

Meet the team behind
Risk Management

Avneesh Kumar has a knack for addressing complex financial topics. His analytical skills drive impactful results in financial risk management and futures & options.

Avneesh Kumar

Research Analyst & Algo Trading Developer

Gaurav Valunj, an IIT Madras graduate, is fluent in financial analysis and risk management. Known for his expertise in MS Excel, he tackles fixed-income and derivatives challenges with efficiency and creativity.

Gaurav Valunj

Financial Modeling Analyst

Frequently Asked Questions

What is Risk Management?

Risk management is the systematic process of identifying, assessing, and addressing uncertainties that could impact objectives. It involves deploying strategies to minimize potential losses, optimize rewards, and ensure operational stability, particularly in volatile environments.

Hedge funds perform a variety of roles but in general, they aim to generate for their investors steady gains, diversification benefits and protection against losses.

A long-term investment is typically held for at least 3 years, though some investors aim for even longer horizons, sometimes decades, to take advantage of compounding returns.

How Do Hedge Funds Calculate Risks?

Hedge funds employ advanced quantitative techniques like Value at Risk (VaR), stress testing, and scenario analysis to measure potential losses. They analyze portfolio sensitivities with metrics such as beta, alpha, and Sharpe ratio while leveraging probabilistic tools like Monte Carlo simulations to balance risk and reward.

A long-term investment is typically held for at least 3 years, though some investors aim for even longer horizons, sometimes decades, to take advantage of compounding returns.

What is the Risk Hedging Technique?

Risk hedging involves mitigating exposure to unfavorable market movements through counterbalancing positions or financial instruments. Common approaches include using derivatives like options and futures, currency or interest rate swaps, and diversification to stabilize returns and protect capital.

A long-term investment is typically held for at least 3 years, though some investors aim for even longer horizons, sometimes decades, to take advantage of compounding returns.

What is Position Sizing ?

Position sizing models determine the amount of capital to allocate to a specific trade based on its risk profile and the overall portfolio strategy. These models help manage exposure and ensure that no single investment can disproportionately affect the portfolio

A long-term investment is typically held for at least 3 years, though some investors aim for even longer horizons, sometimes decades, to take advantage of compounding returns.

What are money management policies?

Money management policies are frameworks that guide how capital is allocated within a hedge fund. They establish risk limits and investment thresholds to protect against significant losses. These policies help ensure that the fund operates within its risk tolerance levels and maintains adequate liquidity.

A long-term investment is typically held for at least 3 years, though some investors aim for even longer horizons, sometimes decades, to take advantage of compounding returns.

What is Trade Management?

Trade management encompasses strategies for monitoring and adjusting trades in real time, optimizing performance, and minimizing losses. This includes setting entry and exit points, managing stop-loss orders, and adjusting positions based on market conditions

A long-term investment is typically held for at least 3 years, though some investors aim for even longer horizons, sometimes decades, to take advantage of compounding returns.

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