Risk Ratio

The risk ratio marks the relative risk of the hAMM system.

Position Pool

At any moment, given the sum of total long positions $X_{all}$ and the sum of total short positions $Y_{all}$ for all trading pairs, position pool $P$ that stands for the all positions held can be illustrated as follows:

$$P=X_{all}-Y_{all}$$

• $X$ is always positive, $Y$ is always negative, $P$ is always positive.

The value of $P$ determines the trading depth of the system.

The larger $P$ is, the better liquidity and better risk capacity for that derivative.

Calculation

The formula of risk ratio $V_{ratio}$ is as follows:

$$V_{ratio}=\dfrac{N_c}{P}=\dfrac{X_c+Y_c}{X_{all}-Y_{all}}$$

• $X$ is always positive and $Y$ is always negative.

• The sign of $V_{ratio}$ means the direction of risk.

• $X_c$ and $Y_c$ are total long or short positions for current derivative, $X_{all}$ and $Y_{all}$ are total long or short positions for all trading pairs.

Position pool $P$ is important to the risk control. When the value of $P$ is large enough, although $N\neq0$, the total risk ratio is still rather limited. When the value of $P$ is small, a normal value of $N$ will significantly increase the risk ratio.

Position mining feature is designed to increase position pool.