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Annova Market Risk Indicators

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What is the capital market risk?

Capital markets such as the stock, bond, foreign currency, and derivatives markets are considered risky because of the constantly changing prices of the securities that are traded. Security prices are volatile, not only influenced by their financial fundamentals, but also by broader market influences such as economic events, political developments, currency movements, or even “black-swan” unexpected events such as natural disasters, or general market panic. The risk of financial loss associated with either choosing to or being forced to sell a security when prices have declined is what is meant by capital market risk.

  • Market risk, or systematic risk, affects the performance of the entire market simultaneously;

  • Because it affects the whole market, it is difficult to hedge as diversification may not help;

  • Market risk may involve changes to interest rates, exchange rates, geopolitical events, or recessions.

How does Annova utilize Market Risk Indicators to mitigate risks?

While debatable, some consider price volatility to be a proxy for risk.

Annova Market Risk Indicators (AMRIs) are quantitative in nature and seek to interpret capital market index data in an attempt to measure the pricing decline potentials, therefore, gauge the market risks. Annova Market Risk Indicators are comprised of formulas and ratios of major indices. The mid-term Market Risk Tolerance Indicators are used to aid mid-term asset allocation decisions, such as dynamic portfolio rebalancing. The short-term Risk Tolerance Indicators can assist trading activities prescheduled toward reaching the longer-term objectives.    

Professional portfolio managers can choose to implement the four types of risk-mitigating strategies including risk avoidance (exit the market), acceptance (stay in the market), transference (apply derivatives), and limitation (set limits) by referencing the outputs from AMRIs in response to the market condition changes.

Annova Model Portfolios

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What are Annova Model Portfolios?

​Annova Model Portfolios are growth-oriented investment portfolios built with a mix of actively managed and passively managed funds. The goal is to provide investors the optimum portfolios with predefined performance and risk tolerance utilizing artificial intelligence-powered data processing tools in response to dynamic global markets. Annova utilizes proprietary technologies, such as Annova Market Risk Indicators (AMRIs), Annova Artificial Intelligence (AAI) to gauge market risks and identify drivers of performance.

Leveraging the strength of diversified expertise

Annova leverages the strength of talented portfolio managers from the globe and embraces the unique characterizations and views of the world they contribute to investors. We believe that diversified expertise forms the unique performances of the Annova Model Portfolios.

Systematic market risk mitigation with Annova Market Risk Indicators

Annova utilizes proprietary technologies, AMRIs, to gauge market risks and identify potential risk mitigation strategies appropriate to each investor’s tolerance level. The risk mitigation strategy is pre-defined as part of the Client Suitability Questionnaire and applied systematically with the discretion of the investment managers. This approach allows

customization of the investment portfolios according to each unique objective of the Client.

All-weather adaptive investment with Annova Artificial Intelligence


Annova Model Portfolios are tested and optimized each quarter. With the integration of new data in the past quarter into the models, the recent market preferences and risk characterizations are learned by AAI. The optimization includes redistribution of long-term asset allocations, exchange of investment vehicles or products, and bringing new investment products into the Models.

Consider Annova Model Portfolios:

  • For investors looking to release the most growth potential of the investment portfolios through active management;

  • For investors looking to dynamically adapt to changing market conditions and align their objectives with their investments.

We provide portfolio performance illustrations to registered users weekly, so registered users can track the historical and ongoing portfolio performance managed by a scheduled rebalancing strategy. As a comparison, one of the four risk mitigation strategies, risk avoidance (exit the market), is also implemented to manage the portfolio according to the direct inputs from AMRIs. Both portfolio performances are compared with a target asset allocation fund as a benchmark.   

Annova Alternative Technologies

What are the alternative technologies?

Alternative investment technologies utilize unconventional portfolio construction methodologies to provide diversification and volatility controls to seek different risk-adjusted returns on the portfolios spread into various time frames. Annova Alternative Technologies (AAT) can create an alternative source of returns for institutional investors by supplying liquidity to the market as supplements to traditional equity and fixed income investments and mitigate risks through active and passive management.

Annova specializes in the following alternative technologies:

  • Quantitative

  • Directional market neutral

  • Actively managed relative value 

This information should not be relied upon as investment advice or a recommendation by AdvisorAnnova. Only an investor or her financial advisor knows enough about their circumstances to make an investment decision.

Investing involves risk, including possible loss of principal. Asset allocation and diversification may not protect against market risk, loss of principal, or volatility of returns.

The Annova Model Portfolios are provided for illustrative and educational purposes only, do not constitute investment advice or a fiduciary investment recommendation to any client or a financial professional, and are intended for use only by a financial professional as a resource to help build a portfolio or as an input in the development of investment advice from such financial professional to her clients. These models shall not be the sole or primary basis for a financial professional to make recommendations to her clients. Past performance is not a guarantee of future results. The Annova Model Portfolios themselves are not funds.

All registered and unregistered trademarks are the properties of Annova LLC.

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