Portfolio Tutorial

Once the selection of the best stocks has been made and entry points have been determined, all that remains is to correctly allocate capital between stocks. Poor capital allocation can turn even the best ideas into a losing portfolio. And the other way around,, optimal capital allocation can make a conventional portfolio extremely efficient.

Eyestock's portfolio functionality allows you to add your real assets or stocks that interest you and evaluate the performance of your portfolio.

7 key metrics for analyzing your portfolio are available at Eyestock. An ideal portfolio should satisfy you on all points of the test.

-Average annual return
The geometric mean return of a portfolio for a selected period or return taking into account reinvestment of profits in the next period.
Please remember that this value is based on 5 years of historical data and does not guarantee future results.

-Risk
A measure of risk is the standard deviation of a portfolio's return. Its value means by how much the portfolio's return may differ from the average level. The higher the standard deviation, the higher the risk of not achieving the average expected return.
The return of a quality portfolio must at least exceed its risk.

-Sharpe Ratio
The Sharpe ratio measures the performance of a portfolio. A value less than 0 indicates the insolvency of the portfolio in the current economic conditions. The higher the value of the coefficient, the higher the efficiency of your portfolio. A ratio greater than 1 usually means the portfolio is extremely efficient.

-Reliability
The probability of achieving the minimum required return is calculated based on the Roy Safety Ratio (SF Ratio).

-Drawdown
This value is the maximum loss value of the portfolio for a given period of time with a probability of 95%.

-Information Ratio
IR is a measurement of portfolio returns beyond the returns of a benchmark, usually an index, compared to the volatility of those returns. Higher information ratios indicate a desired level of consistency, whereas low information ratios indicate the opposite.

-Jensen`s Alpha
Alpha reflects a portfolio's return relative to its expected return. If the value is less than 0, then the portfolio is less efficient than the market. The higher the ratio, the greater the added value from investing in the current portfolio. Typically used to select a manager or fund, but can also be applied to an individual portfolio of assets.

Once you have analyzed your portfolio across all metrics and have come to the conclusion that you want to improve it, you can use the “Optimize weights” feature.
It will go through all possible portfolio alternatives given the minimum and maximum weight of each stock and show the best allocation based on Sharpe Ratio maximization.