Effective risk management is essential to The Dorian Fund’s success and is an integral part of the firm’s trading operations and partnership culture. The firm understands that a degree of risk is required in achieving the firm’s goals but likewise understands that sound risk management must accompany all business opportunities.
The firm’s strict risk management rules are based on proprietary trade evaluators that are centered-around implied volatility, standard deviations, mean reversion, return on capital, and duration. Every position initiated or held by the firm is hedged at an instrument and/or portfolio level. The firm uses future contracts, options, and stocks to hedge positions and/or the portfolio. In addition, to utilizing future contracts, options, and stocks to hedge, the firm has an mandate on the percentage of cash that must be on hand at all times that forces the firm to stay small and allows the firm to take advantage of opportunities that are presented.
The firm’s implementation of the risk management controls and their effectiveness is the ultimate responsibility of the General Partner of the firm. The General Partner has implemented a combination of internal policies and proprietary risk management procedures to achieve an appropriate level of risk management. The management of risk is necessary to protect the firm’s shareholders, assets, and reputation. It is also vital for effective business operations, achievement of objectives, reliable reporting and compliance with laws and regulations.