IV. Advanced Concepts and Theories · 01. novembre 2023
The Kalman filter refines estimates of financial states like stock prices from noisy data, crucial for asset tracking and trend analysis. It uses initial guesses and uncertainty measures, adjusting predictions with observed data over time. Kalman Gain balances predictions with actual trends for optimal estimation.
IV. Advanced Concepts and Theories · 21. octobre 2023
Quantitative finance faces a paradox: static financial models like GBM vs. dynamic market changes. Traditional models, with fixed parameters, struggle against market unpredictability influenced by global events. Emerging AI and machine learning technologies promise more adaptive models, aligning with market fluidity and redefining finance.
IV. Advanced Concepts and Theories · 07. octobre 2023
Explore the term 'almost surely' in stochastic calculus, a concept denoting events that are virtually certain, accounting for inherent randomness. It ensures mathematical consistency in modeling complex, unpredictable systems. Key in theorems and models, it navigates the fine line between certainty and infinite possibilities.
IV. Advanced Concepts and Theories · 16. septembre 2023
Learn to optimize pairs trading using copulas & grasp entropy in portfolio diversification. Our guide demystifies complex concepts with simple analogies, making finance easy for all. Dive into the mix of color ball analogy for entropy & understand risk & predictability in portfolios. Stay ahead with insights crafted for clarity & precision. #Copula #PairsTrading #Entropy #PortfolioDiversification #FinanceExplained
I. Stochastic Models and Processes · 17. juin 2023
The heat equation depicts temperature spread in physics, while Black-Scholes predicts option prices in finance. Both represent diffusion. Exotic options, like barrier and Asian options, use these principles, drawing parallels to heat variations. Complex scenarios in both domains rely on numerical methods for solutions. Essentially, heat transfer principles guide financial predictions. #HeatAndFinance
IV. Advanced Concepts and Theories · 18. février 2023
The d1 term in BS formula in layman’s terms… #BlackScholes #OptionPricing #Volatility #RiskFreeRate #StrikePrice#FinancialMathematics #QuantitativeFinance #Derivatives#d1Formula #FinancialModeling