OI12: Breaking Rules: Going Beyond Traditional Trend Following ft. Tillmann Sachs & Vishal Sharma

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Dec 25, 2024

Tillmann Sachs, co-founder of J8 Capital Management and former structured derivatives expert, and Vishal Sharma, head of trading at J8, discuss innovative trading strategies. They delve into J8’s Global Absolute Return Strategy, emphasizing its diverse methods like carry and arbitrage, while unveiling the Redwood strategy focusing on short-term trades. The conversation highlights risk management techniques, automated trading systems, and their hybrid coding approach to enhance investment strategies and reliability in market operations.

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ANECDOTE

From Civil Engineering to Finance

Tillmann Sachs's interest in risk within project financing during his civil engineering studies led him to finance.
His PhD research on quantifying political risks further solidified this transition.

ANECDOTE

Vishal's Path to Systematic Trading

Vishal Sharma's interest in finance began with personal investing and grew with the availability of computing power and data.
The 2008 financial crisis and observing systematic managed futures returns led him to switch careers.

INSIGHT

Diversifying Across Model Risk

J8's Global Absolute Return Strategy diversifies across model risk by weighting signals according to risk.
It decomposes return drivers into individual strategies, rather than one large model, for granular oversight.

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In this episode, Moritz Seibert speaks with Tillmann Sachs and Vishal Sharma from J8 Capital Management, a systematic London-based CTA. The main focus of their discussion is J8’s Global Absolute Return Strategy, which trades several different systems across markets and styles, including carry, arbitrage, and trend following. We also speak about their latest addition to this portfolio, namely the Redwood strategy, which is a short-term model trading some of the world’s most liquid futures markets and works with intraday data that’s sampled every 3 minutes. It’s an interesting conversation with a CTA “plus” – a term Tillmann uses as they employ many strategies away from rules-based trend following.

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Learn more about J8 Capital.

Episode TimeStamps:

16:16 - Introduction to Tillmann Sachs, Vishal Sharma and J8 Capital Management

04:06 - Why did they start J8 Capital?

05:09 - What got them interested in a systematic approach?

09:12 - The story behind the J8 Global Absolute Return Strategy

13:53 - Multiple different systems or one big system?

16:25 - Why don't they incorporate equities in their strategy?

21:36 - Managing risk in arbitrage strategies

24:44 - Their perspective on going long term VIX

26:34 - How you valuate risk when putting multiple systems together

29:59 - Is the best benchmark for them a multistrat hedge fund?

33:04 - How does Sharma's short term systematic system work?

37:58 - What is Redwood's correlation to the short term traders index?

38:17 - How Sharma is trading the markets

41:17 - How is Sharma's strategy performing?

44:28 - How Sharma runs and maintains a 24 hours a day process

46:36 - The future direction of J8 Capital

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