Words: 3857 Reading time: 11-15 minutes
(The article is long, also more technical, and requires basic statistical knowledge)
I've been struggling to write about this article for a long time, because the content involved is very technical, it's basically not something that ordinary investors would do at home, and people don't necessarily understand, after all, not many people in the stock market are graduates of financial business or mathematics. Therefore, no one can see it before it is written, and someone must not understand it... so it has been a struggle for more than ten years. Yes, I started using VaR more than a decade ago, until recently I took the system out to do some tweaking and optimization, and I decided to introduce it here because during the optimization process, I basically rewrote the relevant user developed tool almost once and now just put it in order to document it.
Value at Risk (VaR) is Chinese for “value at risk”, a tool that measures the risk of a security asset. Before I explain, let's take a look at ChatGPT's explanation of VaR:
Do you understand the above text? People with a financial or mathematical background will probably understand the above text. If you don't understand the above, check out my brief below. VaR is actually the evaluation of an asset through specific statistics or simulations, and over a period of time, a certain confiden...