Archive for July, 2010

What is kurtosis?

Kurtosis is the fourth central movement of a distribution. The first three movements are mean, standard deviation, and skewness. It measures the distribution’s peakedness and the thickness of its tails.

Leptokurtosis, or positive excess kurtosis,  indicates a distribution that is more peaked at the center and has fatter than normal tails.

Platykurtosis, or negative excess kurtosis, indicates a relatively flatter top and thinner tails.

Posted on 12th July 2010
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The Equity Long-Short Style

Hedge funds using the equity long/short style invest in equities, combining long and short investments to reduce but not eliminate market exposure. Major sub-categories of the style include:

  • Global
  • Regional or industry focus
  • Dedicated short bias
  • Emerging market
  • Market timing

The short selling style acts inversely to market direction.

The emerging markets style invests in all types of securities (equity, fixed, sovereign) in emerging markets. It tends to be more volatile and funds are often long-only due to local market restrictions on short selling.

The market timer style varies long and short exposure in reaction to market conditions.

Posted on 3rd July 2010
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