Moving beyond the Limitations of Modern Portfolio Theories in the cryptocurrency market with AAT!
Modern Portfolio Theory is an elegant body of theory which has contributed enormously to our understanding of investing. The innumerably growing assets in the absence of a robust regulatory framework make cryptocurrency portfolio management a challenging and volatile task. Keeping track of the ROI becomes a difficult task. Lack of decision-making data enhances the risk appetite of a portfolio. Lack of knowledge and increasing number of scam-jobs lead to victimization of novice traders.
The advent of blockchain technology and ICO funding models have driven an unprecedented amount of capital to the sector. However, as money has flowed into the digital market, risk analysis tools have not followed suit. Consequently, the radically successful tools of MPT are yet to be applied to understand the interplay between risk and reward both in the market and our portfolios.
AAT aims to bring crypto investments at par with competitor options by allowing a management system that permits easy, user-friendly diversification of many cryptos and ICOs, fast liquidity, and reliable security. The high volatility of cryptocurrency creates abundant opportunities to earn massive amounts of money; if crypto portfolios could be diversified and managed easily enough to attract mainstream interest, cryptos could quickly become a staple in the average investor’s toolbox.
What is needed is a portfolio management system that could integrate the best of traditional and modern portfolio theories. The system provided by AAT integrates newly launched assets as they appear, and put their behaviours against the overall behaviour of the market. Furthermore, the assets are subjected to modern portfolio theories based on artificial intelligence. The proposed portfolio management system by AAT introduces a self-regulated climate where portfolio managers are allowed to create and enforce their policies using smart contracts.
With the rise of passive investing and the struggles of active managers, investors’ commitment to modern portfolio theory has only strengthened over time. AAT’s Portfolio management system begins by asking how the assets in one’s portfolio move in relation to one another, a variable which is quantified mathematically as the correlation coefficient. With these coefficients, the space of possible portfolios is explored, each with their respective expected return and volatility. By developing an exchange from scratch, and by aptly working on the security, efficiency, speed, and scalability in near and longer-term, AAT will develop an exchange as part with any world-class financial system.
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