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Pinnacle Research and Investment Services |
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How Are We Different? PRiS Investment Research generates superior returns for Investors by giving due importance to philosophy of Behavioral Finance and Risk Management, in addition to the fundamental and technical principles of investment management. While the FIGURE methodology provides a way for the fundamental appraisal of a stock for inclusion in your portfolio, the technical analysis required for optimal execution is aided by an indigenous and sophisticated computerized expert system termed 'Alpha Generator'. And that's not all. PRiS provides a custom-reporting mechanism (i-Report) for regularly and effortlessly monitoring the real performance of your portfolio in proportion to the underlying risks. . 
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PRiS' Alpha Generator Alpha Generator is PRiS’ indigeneous, computerized system for Technical Analysis of stocks that leverages advanced software programming to pin-point the optimal entry (buy) and exit (sell) points for securities under our sphere of coverage. But before we proceed to describe its nuances, it would perhaps be better to first prime up certain basics on evaluating performance of an equity portfolio. Gauging a portfolio’s performance on the basis of its delivered returns alone is a common mistake that several Investors tend to commit. The several measures to quantify the risks undertaken to derive such returns are often overlooked by non-institutional investors. Capital Asset Pricing Model (CAPM), a widely accepted theory of finance for over five decades, is used to evaluate individual positions in a portfolio as well as to evaluate managed portfolios against a benchmark index. CAPM is predicated on Efficient Market Hypothesis (EMH) being true (though this itself has been questioned by the proponents of Behavioral Economics), and simplistically put, its three key components may be defined as:
We encourage investors to read more on this topic but it must be pretty obvious by now that an Investor’s intent would be to maximize their portfolio’s alpha while checking against excessive beta (to limit transaction expenses that lower the net real returns). Researchers have identified superior (private) information, better methods for processing information and behavioral biases as three possible sources of alpha. While it is practically impossible for anyone to consistently possess superior (private) information on stocks (at least by fair means), the Alpha Generator leverages the latter two sources through its unique financial modelling and design to compute alpha, beta and r-Square in real-time for a dynamic portfolio. It is thus able to pin-point with remarkable accuracy which stock positions, if any, within the portfolio need an adjustment. For example, the Alpha Generator will track if an out-performing stock within the portfolio has gone way beyond its Fair Value and hence has a much higher probability of correcting in the near future (as per EMH, the market is known to correct such price inefficiencies sooner or later). If it be so, the Alpha Generator will provide its subscriber with the most profitable price point for lowering their stake in (or exiting) such a higher-risk stock position. On the contrary, a high-growth stock that may have run-up hard recently post delivering a positive earnings surprise, may give the perception of correcting in the near future, and is therefore quite likely to be sold pre-maturely by the Investor (as a result of one of their behavioral biases). We have used the term pre-maturely because the stock in spite of its recent bull-run may still be way lower than its true Fair Value. Selling it therefore would be akin to leaving money on the table and Alpha Generator will precisely caution the Investor against committing such a costly financial mistake, which may end up lowering the potential overall returns of their portfolio. After the close of markets each day, the Alpha Generator takes a set of pre-defined expert rules and applies them each night, without any emotion or bias, to the quantitative data of equity, debt and derivative products covered under our research. The amount of data analyzed by Alpha Generator on a daily basis is so large that it would take months, even years, for the task to be completed manually. To avoid distortion and undue turnover costs for a portfolio, the expert rules are updated only once each quarter. The Alpha Generator has been operated extensively on both virtual and real client portfolios since January 2011, and found to consistently deliver remarkably accurate results! |
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Disclaimer: PRiS does not guarantee any specific financial returns, business outcome or market performance based on its research and advisory services.
Disclaimer: PRiS does not guarantee any specific financial returns, business outcome or market performance based on its research and advisory services.
