Alpha Ally: Passive Trading Strategy
Discover Alpha Ally, a portfolio trading model that is geared towards identifying stocks that are outperforming the index, regardless of fundamentals. This model aims to identify most promising stocks in the market without being influenced by a stock's underlying fundamentals.
In this post, we'll delve into the key features and benefits of Alpha Ally, providing insights on how it can complement your existing strategies.
What is Alpha Ally?
Alpha Ally is a portfolio trading model that selects stocks whose alpha is greater after adjusting its beta to that of the index. Alpha and beta are two different aspects of stocks and funds. Beta is a measure of volatility relative to a benchmark, such as the NIFTY 50, and Alpha is the excess return on a stock compared to the benchmark.
How does it work?
The model uses a CAPM Alpha Ranking methodology, which is based on the principle that stocks that beat the market last month are likely to beat the market again in the subsequent month. This methodology has been demonstrated globally across markets.
Is Alpha Ally suitable for me?
Alpha Ally is suitable for investors who can tolerate portfolio volatility slightly greater than broader indices and can take time out once a month to rebalance their portfolio. This model is ideal for long-term wealth creation.
Note: The model is designed to generate alpha, or excess returns, but the level of risk associated with this model may be higher than that of a diversified portfolio. Investors should be aware that the returns generated by this model may be high, but they also come with a high level of volatility.
Kindly conduct your own research and analysis before making any investment decision.
Model performance
*Backtest period for Performance Metrics is Apr’ 2014 to Sep' 2022.
Calendar days in all day metrics; returns include slippages.
Frequently Asked Questions:
How is Alpha Ally different from other trading models?
Alpha Ally is a portfolio trading model that aims to identify stocks that are performing better than the index, with no bias about its fundamentals. It uses a CAPM Alpha Ranking methodology, which is based on the principle that stocks that beat the market last month are likely to beat the market again in the subsequent month.
What are the chances of success with Alpha Ally?
The model is designed to work well when the mid and small cap stocks are in an uptrend.
Note: In a sideways market and in downtrends, stocks can chop around and cause losses.
What is the minimum capital requirement?
The minimum capital requirement for Alpha Ally is ₹2,00,000 per trade.
How often do I need to act on signals?
It is recommended that you act on 2 signals per month.
How long should I subscribe for?
A minimum period of 1 year is recommended for optimal results.
Final thoughts
Alpha Ally is a valuable addition to any investor's portfolio. Its unique methodology of identifying stocks that are performing better than the index, with no bias about its fundamentals, can provide long-term wealth creation opportunities. If you can tolerate portfolio volatility slightly greater than broader indices and can take time out once a month to rebalance your portfolio, this model may be suitable for you.
Disclaimer: The information provided in this post is for general informational purposes only. It should not be considered as financial or investment advice. Please conduct your own research and consult with a financial advisor before making any investment decisions.
Past performance is not indicative of future results and all investments involve risk.
The authors and the company they represent do not guarantee any specific outcome or profit.
