Our Methodology.

Professional-grade portfolio analysis powered by institutional models

How RiskOptimix Works

A comprehensive approach to modern portfolio analysis

Multi-Layered Analysis

We combine traditional portfolio metrics with cutting-edge GARCH ensemble models to provide both immediate insights and sophisticated risk forecasting.

  • Essential portfolio statistics
  • Risk metrics (VaR, Sharpe ratio, maximum drawdown)
  • Advanced volatility modeling

Institutional-Grade Models

Our Premium forecasting uses the same sophisticated models employed by hedge funds and institutional investors, making professional risk management accessible to everyone.

  • CCC & DCC ensemble modeling
  • Dynamic correlation analysis
  • Time-varying risk forecasts

Our Four-Step Process

From raw data to actionable insights

1

Data Collection & Validation

We retrieve up to 10 years of historical data for each stock in your portfolio using professional-grade financial data sources. Our system validates data quality and handles corporate actions to ensure accuracy.

Real-time data via yfinance API with comprehensive error handling
2

Statistical Analysis

We calculate comprehensive portfolio metrics including returns, volatility, correlations, and risk measures. This forms the foundation for understanding your portfolio's current risk profile.

Sharpe ratios, maximum drawdown, Value-at-Risk calculations
3

Advanced Modeling Premium

For Premium users, we deploy ensemble GARCH models that combine multiple volatility models (GARCH, EGARCH, TGARCH) with different probability distributions to create robust forecasts.

12 models per stock, weighted by performance
4

Risk Forecasting Premium

Using either CCC (constant correlation) or DCC (dynamic correlation) models, we forecast future portfolio risk and provide actionable insights for risk management.

Multi-horizon forecasts with confidence intervals

Technical Framework

The mathematics behind professional risk management

GARCH Ensemble Modeling

We fit multiple volatility models for each asset:

  • GARCH(1,1) - Standard volatility clustering
  • EGARCH - Asymmetric volatility effects
  • TGARCH - Threshold effects
  • APARCH - Asymmetric power effects
$$\sigma_t^2 = \omega + \alpha \varepsilon_{t-1}^2 + \beta \sigma_{t-1}^2$$

Correlation Dynamics

Two sophisticated approaches to correlation modeling:

CCC Model

Constant correlations, faster computation, stable results

DCC Model

Time-varying correlations, captures market dynamics

$$Q_t = (1-\alpha-\beta)\bar{Q} + \alpha(z_{t-1}z'_{t-1}) + \beta Q_{t-1}$$

Risk Forecasting

Multi-horizon portfolio risk predictions:

  • 1-day ahead - Immediate risk assessment
  • 5-day ahead - Weekly risk planning
  • 22-day ahead - Monthly forecasting
  • Confidence intervals - Uncertainty quantification
$$\text{VaR}_{t+h} = \mu_{t+h} + \Phi^{-1}(\alpha)\sigma_{t+h}$$

Why This Approach Matters

The difference between basic analysis and professional risk management

Predict, Don't Just Analyze

Traditional portfolio analysis only tells you what happened. Our approach predicts what's likely to happen next, helping you make proactive risk management decisions rather than reactive ones.

Capture Market Dynamics

Our DCC models recognize that correlations change during market stress. When markets crash, correlations often spike—and our models capture this, providing realistic risk estimates when you need them most.

Institutional-Quality, Individual-Friendly

We democratize sophisticated risk models previously available only to large institutions. Get hedge fund-quality analysis without the complexity or cost barriers.

Evidence-Based Decision Making

Every forecast comes with confidence intervals and validation metrics. You know not just what we predict, but how confident we are in those predictions—critical for informed decision making.

Explore Our Methodology Further

Download detailed examples and technical documentation

Example Analysis Report

See a complete portfolio analysis report showcasing our methodology with real data and forecasts.

Download Example (PDF)
Technical Documentation

Comprehensive mathematical derivations, model specifications, and validation procedures behind our approach.

Download Technical Report (PDF)

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Contact

Get in touch with our portfolio analysis experts

Email

support@riskoptimix.com

Response Time

We typically respond within 24 hours

Support

Technical support and portfolio analysis questions