That's easy. Compare the difference when there's a real pullback. What's your negative alpha vs your positive alpha in the upside? In other words - 46/9= 400% alpha, 100% beta. If the market drops 5%, do you lose 100% beta and more than 400% alpha? Or do you lose less? I'd try to control the downside alpha as close to zero as possible, meaning I lose beta to the downside and win alpha to the upside. I hope that makes sense.
This makes sense. Thanks for your input! I need to put the data to it, but just from watching, on some of the big down days we have had over the last 2 months, I.e. dow is down 5%, my account is typically down less than 1%.
Got it. Thanks for your response. I tend to trade equities that have had a pretty bid downfall and to me (based on my research) seem oversold. Obviously the downside risk is always stock going to 0, but I try to put my money into companies that do not stand a chance of bankruptcy. Is there a software that can do backtesting for you, or do you have to manually get all of the data?