Risk Model ( INEC1 — Indian Equity Consolidated-1 )
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About MethodTech Risk Models
About MethodTech Risk Models
About MethodTech Risk Models
About MethodTech Risk Models
Modern investing lives at the intersection of theory, process and data. Our objective is to deliver risk analytics that are economically interpretable, empirically robust, and operationally useful across the full investment lifecycle—from research and idea generation to portfolio construction, risk control, and performance attribution.
MethodTech’s 39-factor model is a fundamental multiple-factor model (MFM) designed for daily use in single-country and multi-regional equity portfolios. It combines:
1 Market factor (unit exposure)
12 Style factors (cross-sectional attributes)
26 Industry factors (mutually exclusive, collectively exhaustive)
We emphasise transparent construction, disciplined standardisation, and ongoing diagnostics so users can both trust the numbers and understand what they mean for portfolios.
Modern investing lives at the intersection of theory, process and data. Our objective is to deliver risk analytics that are economically interpretable, empirically robust, and operationally useful across the full investment lifecycle, from research and idea generation to portfolio construction, risk control, and performance attribution.
MethodTech’s 39-factor model is a fundamental multiple-factor model (MFM) designed for daily use in single-country and multi-regional equity portfolios. It combines:
1 Market factor (unit exposure)
12 Style factors (cross-sectional attributes)
26 Industry factors (mutually exclusive, collectively exhaustive)
We emphasise transparent construction, disciplined standardisation, and ongoing diagnostics so users can both trust the numbers and understand what they mean for portfolios.
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Who should read this
Who should read this
Who should read this
Who should read this
Portfolio managers seeking to align active bets with well-measured risks
Risk teams managing constraints, limits, and scenario awareness
Quants & researchers evaluating factor definitions, stability, and efficacy
Attribution & reporting professionals producing clear, defensible narratives
Portfolio managers seeking to align active bets with well-measured risks
Risk teams managing constraints, limits, and scenario awareness
Quants & researchers evaluating factor definitions, stability, and efficacy
Attribution & reporting professionals producing clear, defensible narratives
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INEC-1 — Indian Equity Consolidated-1
INEC-1 — Indian Equity Consolidated-1
INEC-1 — Indian Equity Consolidated-1
INEC-1 — Indian Equity Consolidated-1
INEC-1 is MethodTech’s India-focused, production-grade 39-factor equity risk model (1 Market, 12 Style, 26 Industry) for daily portfolio construction, risk control, and attribution.
INEC-1 is MethodTech’s India-focused, production-grade 39-factor equity risk model (1 Market, 12 Style, 26 Industry) for daily portfolio construction, risk control, and attribution.
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Coverage Universe (India — all listed equities)
Coverage Universe (India — all listed equities)
Coverage Universe (India — all listed equities)
Coverage Universe (India — all listed equities)
All Indian listed equity issuers across BSE and NSE (common equity; core model excludes ETFs/InvITs/REITs/funds unless specified) ~5,000.
All Indian listed equity issuers across BSE and NSE (common equity; core model excludes ETFs/InvITs/REITs/funds unless specified) ~5,000.
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Factor Descriptions (39 Factors)
Factor Descriptions (39 Factors)
Factor Descriptions (39 Factors)
Factor Descriptions (39 Factors)
Market Factor (1)
Market Factor (1)
The Market factor is the baseline driver of equity returns. Exposure is unavoidable in long-only portfolios; attribution relative to it reflects active bets elsewhere. Tilt here reflects macro risk appetite, liquidity, and sentiment. High reliance increases drawdown sensitivity but ensures participation in rallies; neutralization is typically feasible only in long-short/hedged setups.
The Market factor is the baseline driver of equity returns. Exposure is unavoidable in long-only portfolios; attribution relative to it reflects active bets elsewhere. Tilt here reflects macro risk appetite, liquidity, and sentiment. High reliance increases drawdown sensitivity but ensures participation in rallies; neutralization is typically feasible only in long-short/hedged setups.
Style Factors (12)
Style Factors (12)
Style factors capture systematic characteristics (e.g., size, value, momentum, volatility, growth) that cut across industries and regions—distinct from sector membership. Each stock’s exposure is derived from measurable descriptors (e.g., book-to-price for Value, trailing volatility for Risk) and standardized cross-sectionally. They reflect persistent attributes, investor behaviour, and structural themes shared by similar securities. Including style factors explains cross-sectional return patterns not captured by Market or Industry, improving risk decomposition and attribution.
The line under each factor name provides a simple interpretation of what that factor is intended to capture.
Style factors capture systematic characteristics (e.g., size, value, momentum, volatility, growth) that cut across industries and regions—distinct from sector membership. Each stock’s exposure is derived from measurable descriptors (e.g., book-to-price for Value, trailing volatility for Risk) and standardized cross-sectionally. They reflect persistent attributes, investor behaviour, and structural themes shared by similar securities. Including style factors explains cross-sectional return patterns not captured by Market or Industry, improving risk decomposition and attribution.
The line under each factor name provides a simple interpretation of what that factor is intended to capture.
1. BETA — Beta
1. BETA — Beta
Identifies securities that amplify or dampen market cycles. High beta magnifies upside/downside (tactical, but risky in stress). Low beta is defensive and can anchor drawdowns. Portfolio beta tilts shape the risk–reward balance.
Identifies securities that amplify or dampen market cycles. High beta magnifies upside/downside (tactical, but risky in stress). Low beta is defensive and can anchor drawdowns. Portfolio beta tilts shape the risk–reward balance.
2. SIZE — Size
2. SIZE — Size
Encodes the large-cap vs small-cap divide. Smaller firms offer higher potential but with higher volatility and lower liquidity; large caps provide stability/institutional sponsorship. Exposure shows where the portfolio sits on the growth–stability spectrum. By modelling the size factor in this way, the model isolates the relative performance of small versus large companies beyond what is explained by market or industry influences.
Encodes the large-cap vs small-cap divide. Smaller firms offer higher potential but with higher volatility and lower liquidity; large caps provide stability/institutional sponsorship. Exposure shows where the portfolio sits on the growth–stability spectrum. By modelling the size factor in this way, the model isolates the relative performance of small versus large companies beyond what is explained by market or industry influences.
3. STREV — Short-Term Reversal
3. STREV — Short-Term Reversal
Captures mean reversion at short horizons (liquidity shocks, profit-taking, crowded unwind). Positive exposure = contrarian tilt; negative = chasing recent winners. Useful gauge of sensitivity to short-lived reversals.
Captures mean reversion at short horizons (liquidity shocks, profit-taking, crowded unwind). Positive exposure = contrarian tilt; negative = chasing recent winners. Useful gauge of sensitivity to short-lived reversals.
4. LTMOM — Long-Term Momentum
4. LTMOM — Long-Term Momentum
Captures mean reversion at short horizons (liquidity shocks, profit-taking, crowded unwind). Positive exposure = contrarian tilt; negative = chasing recent winners. Useful gauge of sensitivity to short-lived reversals.
Captures mean reversion at short horizons (liquidity shocks, profit-taking, crowded unwind). Positive exposure = contrarian tilt; negative = chasing recent winners. Useful gauge of sensitivity to short-lived reversals.
5. VALUE — Value
5. VALUE — Value
Separates inexpensive (value) from expensive (growth) names. Value tends to outperform in recoveries/mean-reversion; growth excels in innovation-led expansions. A tilt toward value implies reliance on re-rating.
Separates inexpensive (value) from expensive (growth) names. Value tends to outperform in recoveries/mean-reversion; growth excels in innovation-led expansions. A tilt toward value implies reliance on re-rating.
6. GROWTH — Growth
6. GROWTH — Growth
Signals reinvestment and expansion. Benefits from innovation/structural tailwinds; vulnerable to valuation compression in risk-off or rising-rate regimes. Counterbalances Value in strategic tilts.
Signals reinvestment and expansion. Benefits from innovation/structural tailwinds; vulnerable to valuation compression in risk-off or rising-rate regimes. Counterbalances Value in strategic tilts.
7. LOWVOL — Low Volatility
7. LOWVOL — Low Volatility
Captures the low-risk anomaly. Positive exposure = smoother compounding/defensiveness (may lag sharp rallies). Negative exposure = high-risk/high-reward tilt.
Captures the low-risk anomaly. Positive exposure = smoother compounding/defensiveness (may lag sharp rallies). Negative exposure = high-risk/high-reward tilt.
8. LIQUIDITY — Liquidity
8. LIQUIDITY — Liquidity
Measures trading ease and depth. High exposure = liquid, institutionally favored names. Low exposure = potential execution risk (wider spreads, price impact), critical under stress.
Measures trading ease and depth. High exposure = liquid, institutionally favored names. Low exposure = potential execution risk (wider spreads, price impact), critical under stress.
9. LEVERAGE — Leverage
9. LEVERAGE — Leverage
Captures financial structure risk. High exposure = amplified equity variability, sensitivity to credit spreads/refinancing. Low = conservative balance sheets and defensive resilience.
Captures financial structure risk. High exposure = amplified equity variability, sensitivity to credit spreads/refinancing. Low = conservative balance sheets and defensive resilience.
10. EARNYIELD — Earnings Yield
10. EARNYIELD — Earnings Yield
Valuation relative to profits. High exposure = cheap cash flows (value-like); low = expensive, growth-dependent. Complements Value/Profitability as a valuation anchor.
Valuation relative to profits. High exposure = cheap cash flows (value-like); low = expensive, growth-dependent. Complements Value/Profitability as a valuation anchor.
11. EARNVAR — Earnings Variability
11. EARNVAR — Earnings Variability
Measures fundamental stability. High exposure = volatile earnings/cash flows (risk premium, surprise risk). Low = predictable fundamentals (quality tilt).
Measures fundamental stability. High exposure = volatile earnings/cash flows (risk premium, surprise risk). Low = predictable fundamentals (quality tilt).
12. PROFIT — Profitability
12. PROFIT — Profitability
Captures operating efficiency/quality. High exposure = strong margins, competitive advantage, resilience. Low = weaker fundamentals (riskier cyclicals, distress).
Captures operating efficiency/quality. High exposure = strong margins, competitive advantage, resilience. Low = weaker fundamentals (riskier cyclicals, distress).
Industry Factors (26)
Industry Factors (26)
Industry factors isolate sector-level drivers (demand cycles, input costs, regulation, technology). Tilts reflect thematic/cyclical positioning; neutralization enables clean style analysis.
The line under each factor name provides a simple interpretation of what that factor is intended to capture.
Industry factors isolate sector-level drivers (demand cycles, input costs, regulation, technology). Tilts reflect thematic/cyclical positioning; neutralization enables clean style analysis.
The line under each factor name provides a simple interpretation of what that factor is intended to capture.
1. AERODEF — Aerospace & Defence
1. AERODEF — Aerospace & Defence
1. AERODEF — Aerospace & Defence
Supplier cycles tied to OEM volumes and costs.
Supplier cycles tied to OEM volumes and costs.
2. AUTOMOBL — Automobiles
2. AUTOMOBL — Automobiles
Consumer demand, credit cycles, commodity inputs.
Consumer demand, credit cycles, commodity inputs.
3. AUTOCOMP — Auto Components
3. AUTOCOMP — Auto Components
Supplier cycles tied to OEM volumes and costs.
Supplier cycles tied to OEM volumes and costs.
4. BANKS — Banks
4. BANKS — Banks
Interest rates, credit quality, regulation.
Interest rates, credit quality, regulation.
5. BUSINSERV — Business Services
5. BUSINSERV — Business Services
Business cycle, outsourcing intensity, utilization.
Business cycle, outsourcing intensity, utilization.
6. CAPGOODS — Capital Goods
6. CAPGOODS — Capital Goods
Industrial activity, capex cycles, infra spend.
Industrial activity, capex cycles, infra spend.
7. CHEMICALS — Chemicals
7. CHEMICALS — Chemicals
Feedstock prices, global demand, regulation.
Feedstock prices, global demand, regulation.
8. CONSUMDISC — Consumer Discretionary
8. CONSUMDISC — Consumer Discretionary
Discretionary spend, confidence, lifestyle trends.
Discretionary spend, confidence, lifestyle trends.
9. CONSUMDUR — Consumer Durables
9. CONSUMDUR — Consumer Durables
Housing/consumer durable cycles.
Housing/consumer durable cycles.
10. CONSUMSTAP — Consumer Staples
10. CONSUMSTAP — Consumer Staples
Defensive demand, input costs, regulation.
Defensive demand, input costs, regulation.
11. FINLSERV — Financial Services
11. FINLSERV — Financial Services
Financial intermediation, market cycles, claims.
Financial intermediation, market cycles, claims.
12. HEALTHCARE — Healthcare
12. HEALTHCARE — Healthcare
Demographics, innovation, policy.
Demographics, innovation, policy.
13. ITSERVIC — IT Services
13. ITSERVIC — IT Services
Global IT spend, wage cycles, FX.
Global IT spend, wage cycles, FX.
14. MATERIALS — Materials
14. MATERIALS — Materials
Industrial demand, commodity cycles.
Industrial demand, commodity cycles.
15. METMINING — Metals & Mining
15. METMINING — Metals & Mining
Global commodity prices, trade, capex.
Global commodity prices, trade, capex.
16. OILGAS — Oil, Gas & Consumable Fuels
16. OILGAS — Oil, Gas & Consumable Fuels
Energy prices, geopolitics, drilling activity.
Energy prices, geopolitics, drilling activity.
17. PHARMA — Pharmaceuticals
17. PHARMA — Pharmaceuticals
Pipelines, IP/patents, regulation.
Pipelines, IP/patents, regulation.
18. POWERGEN — Power Generation
18. POWERGEN — Power Generation
Fuel costs, demand, policy/incentives.
Fuel costs, demand, policy/incentives.
19. REALESTATE — Real Estate Management & Development
19. REALESTATE — Real Estate Management & Development
Property cycles, financing, urbanization.
Property cycles, financing, urbanization.
20. SOFTWARE — Software
20. SOFTWARE — Software
Enterprise spend, SaaS adoption, innovation.
Enterprise spend, SaaS adoption, innovation.
21. TECHCOMP — Technology Components
21. TECHCOMP — Technology Components
Tech capex cycles, innovation, supply chains.
Tech capex cycles, innovation, supply chains.
22. TELECOM — Telecommunication Services
22. TELECOM — Telecommunication Services
ARPU, spectrum/regulation, competition.
ARPU, spectrum/regulation, competition.
23. TRADDIST — Trading Distributors
23. TRADDIST — Trading Distributors
Volume leverage, pricing power, supply chains.
Volume leverage, pricing power, supply chains.
24. TRANSPORT — Transport
24. TRANSPORT — Transport
Trade flows, fuel costs, macro cycles.
Trade flows, fuel costs, macro cycles.
25. UTILITIES — Utilities
25. UTILITIES — Utilities
Yield sensitivity, regulation, fuel mix.
Yield sensitivity, regulation, fuel mix.
26. MISCELLAN — Miscellaneous
26. MISCELLAN — Miscellaneous
Catch-all for niche categories; revisit periodically.
Catch-all for niche categories; revisit periodically.