We have been asked how we make market analysis and forecasts. We use a combination of statistical and probability analysis along with numerical analysis of market data in real time. We have calibrated our models based on our view of what we think is the actual, rather than the reported major news events.
Calibration of Financial Models:
We test the calibration of our financial models using advanced stochastic econometrics. We have developed a proprietary model with variables derived from fundamental relationships and the extraction of information content from news events.
Our financial engineering group has developed models of most of the major market indices and currencies where we identify arbitrage strategies based on the analysis of the indices relative to our model.
We have constructed our own model of the major indices using the put-call parity equation and replicated the indices for real time forecasting and arbitrage opportunities.
An arbitrage opportunity is created when there is an imbalance in pricing or volume or news events between our model and the trading of the actual index.
We use Asymmetrical Information Possession (AIP) to gain an advantage in the execution of our arbitrage ideas. AIP allows our group to be competitive with other major market participants.