Our long only strategy uses a modified version of Markowitz's Modern Portfolio Theory (MPT) in which the maximum drawdown of the portfolio is controlled as an objective function.
A systematic long only strategy trading a basket of liquid assets helps to confirm current market trends, boosting performance in rising markets and moving to stablecoins in unfavorable market conditions.
The optimizer is applied to the portfolio chosen by our Investment Committee, yielding weights for each asset.
Full allocations are never enforced. Only assets that add value to the portfolio without negatively affecting the overall risk profile are assigned weightings.
During periods of market instability, the portfolio optimizes risk adjusted returns by holding significant cash or cash derivative positions.
The modified MPT system used by BaseTwo has proven itself to consistently reduce risk and increase return by as much as 40%, on both scales. The strategy has been successfully applied to the capital markets over the past 15 years and more recently to the digital asset markets for the past 3 years.