Risk Management
Portfolio construction and management
Building and managing a diversified trading portfolio
January 29, 2025
13 min read
PROFIX Team
Key Takeaways
- •Diversification reduces overall portfolio risk
- •Asset allocation should match your risk tolerance
- •Regular rebalancing maintains target allocations
- •Monitor correlation between portfolio components
Portfolio Construction
Portfolio construction is the art of combining different assets to achieve your investment objectives while managing risk.
Portfolio Components
- Core Holdings: Long-term, stable positions
- Satellite Positions: Shorter-term, higher-risk trades
- Cash Reserves: Emergency funds and opportunities
- Hedging Positions: Risk reduction strategies
Diversification Principles
- Asset Class Diversification: Spread across stocks, bonds, commodities
- Geographic Diversification: Invest in different countries
- Sector Diversification: Avoid concentration in one sector
- Strategy Diversification: Use different trading approaches
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