Say I deploy a hedged directional algo, like Zen Credit Spread, with full amount of 3.2L (algo won’t take beyond it). How to use correlation to minimise my market exposure and reduce the maximum drawdown if I want other algo(s) to run parallel, say with 10L capital? What’s the base theory?
Thank you for your question.
A similar question around deploying multiple Algos, diversification, and the philosophy behind reducing overall portfolio risk has already been discussed in one of our community posts.
I request you to please refer to the post here: Which algo trading strategy should you deploy? A cheat sheet — and the philosophy behind it - #3 by Nikhil_Bhandari