Spotalpha’s Portfolio Optimizer makes investing safer by building well diversified portfolios. It works by using various statistical and mathematical models that analyse historical market data and identify the optimal asset selection and allocation that can provide the highest returns at a low level of risk.
The following chart provides a snapshot of how Portfolio Optimiser works.
In the above chart, the green line represents performance of the benchmark NIFTY-50, which is rebalanced from time to time by NSE. The pink line represents performance if the constituents of NIFTY-50 were provided with equal allocation of funds. The orange line represents performance based on allocations provided by Spotalpha’s Portfolio Optimiser. It is clear from the above chart that optimised selection and efficient allocation provided by Spotalpha’s Portfolio Optimiser for the same basket of 50 stocks can significantly improve returns while reducing maximum drawdown and volatility of the equity curve.
In summary, the Portfolio Optimizer determines the optimal selection and asset allocation that improves returns while reducing risk.