Risk Management Financial risk is defined as something difficult to be predicted. So we prepare for the unexpected accident. It is called "hedge". The example of hedge is the insurance.
Because this risk move widely along time axis, time series analysis is important.
Original meaning of "portfolio" is one of bags. There are two points in this analysis.
Portfolio analysis considers average (expectation) and variance. Average is considered as benefit. Variance is considered as risk.
And correlation analysis is also important. It is to prevent having similar movement brands. If correlation is strong, it means similar.
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