@gpharshas Yes sir. We can apply the same method to Nifty 500 or any other universe as we capturing rate of change and balancing it with a check on volatility.
The decisions you will have to make is the (1) size of the pf, (2) up to what rank you will not exit a stock and (3) rebalancing frequency
- Typically, people use the top decile; in this case, the pf will 50 stocks.
- Again people use 2x the pf size as Worst Rank Held (WRH). If you have a 50 stock pf, you will not exit till the stock falls below the 100th rank. This will help reduce the churn a lot.
I do not give so much of leeway. For a 25 stock pf, I exit if it falls below 30. - As it contains a lot of smallcap and midcap stocks as well, you might want to consider a rebalancing frequency of every two weeks. You could do the rebalance on 1st and 16th of every month.
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