Market-Neutral & High-Frequency Trading

Mathematically, our market-neutral strategy can be represented as:

Where:

• α: α represents the strategy's excess return independent of the market.

• β: β is the sensitivity of the portfolio to the market, which we optimize to be close to zero (β≈0)

• ϵ: ϵ denotes the error term or the idiosyncratic risk.

The AI leverages machine learning models to predict short-term price movements based on historical patterns and real-time data inputs, fine-tuning these predictions using reinforcement learning. The core of the strategy is to generate a steady α\alphaα while minimizing exposure to broader market movements (β).

Additionally, our high-frequency trading algorithm, HFT(t), can be described as:

Where:

• P(t) is the price at time t.

• HFT(t) represents the instantaneous rate of return driven by rapid execution over infinitesimally small time intervals.

Through these strategies, Shield Layer can generate consistent, positive returns with minimal risk, ensuring robust performance even in highly volatile markets.