Portfolio Risk Calculator Guide

How to Use the Portfolio and Non-Portfolio Risk Calculators

Step-by-Step Guide

1. 1
   Access the Calculators

   Navigate to the appropriate calculator to begin your analysis.

   • Visit the Portfolio Risk Calculator at younginvestorcalculator.com/portfolio-risk or the Non-Portfolio Risk Calculator at younginvestorcalculator.com/non-portfolio-risk.
   • Ensure access to portfolio statements, bond prospectuses, or market data for Q1 2025.
   • Source: Portfolio statements from pension funds (e.g., Databank, Stanbic Bank Ghana) or brokers (e.g., IC Securities). Bond terms from gse.com.gh. Market data from bog.gov.gh.
   • Tip: Bookmark calculator pages and organize financial documents for easy reference.
2. 2
   Select Risk Metric

   Choose the risk metric to calculate based on your investment goals.

   • Portfolio Risk Calculator: Options include Volatility, Beta, Sharpe Ratio, VaR, CVaR, etc.
   • Non-Portfolio Risk Calculator: Options include Credit Spread, Probability of Default (PD), Expected Loss (EL), Modified Duration, etc.
   • Source: Select based on needs (e.g., VaR for loss estimation, Sharpe Ratio for performance). No external data required for selection.
   • Tip: Use VaR or EL for risk budgeting, Beta for market sensitivity, or Duration for interest rate risk.
3. 3
   Enter Portfolio Risk Inputs

   For the Portfolio Risk Calculator, input portfolio details and market parameters.

   • Asset Allocations (%): Government Securities, Equities, Corporate Debt, etc., summing to 100%. Source from portfolio statements or pension fund reports (e.g., Databank, Enterprise Group).
   • Portfolio Value (GHS): Total portfolio value from account statements.
   • Market Parameters: Market Return (e.g., 8–12% from GSE-CI), Market Volatility (15–20%), Benchmark Return (e.g., T-bill rates from bog.gov.gh), etc.
   • Drawdown Parameters: Peak and Trough Values from historical statements.
   • Correlation Pair: Select asset pairs (e.g., equities-foreign) using estimates from brokers or Bloomberg.
   • Source: GSE (gse.com.gh) for equities, Bank of Ghana for bonds, NPRA (npra.gov.gh) for allocation limits.
   • Tip: Ensure allocations comply with NPRA limits (e.g., max 5% foreign assets). Use recent market data for accuracy.
4. 4
   Enter Non-Portfolio Risk Inputs

   For the Non-Portfolio Risk Calculator, input bond or loan-specific data.

   • Credit Risk Inputs: Corporate Yield (6–10%), Risk-Free Yield (3–5% from bog.gov.gh), PD (1–5%), LGD (40–60%), EAD (bond value).
   • Bond Risk Inputs: Bond Price, Macaulay Duration (2–5 years), YTM, Yield Change (0.5–2%) from GSE or prospectuses.
   • Liquidity Risk Inputs: Bid and Ask Prices from GSE or OTC quotes.
   • Source: Bond prospectuses, GSE (gse.com.gh), or banks (e.g., Ecobank). PD/LGD from credit ratings or bank assessments.
   • Tip: Use conservative estimates for PD/LGD if data is unavailable. Verify bond terms for accuracy.
5. 5
   Calculate and Interpret Results

   Submit data to compute risk metrics and interpret outputs for decision-making.

   • Portfolio Risk Results:
     • Volatility: Portfolio risk (e.g., 10.25%). Lower is better.
     • Beta: Market sensitivity (e.g., 0.85). Below 1 is less risky.
     • VaR: Max loss at 95% confidence (e.g., GHS 152,250).
     • Sharpe Ratio: Risk-adjusted return (e.g., 1.20). Higher is better.
   • Non-Portfolio Risk Results:
     • Credit Spread: Risk premium (e.g., 2.50%).
     • Expected Loss: PD × LGD × EAD (e.g., GHS 2,000).
     • Modified Duration: Interest rate sensitivity (e.g., 2.80 years).
   • Source: Compare results to industry benchmarks from spglobal.com or npra.gov.gh.
   • Tip: Use VaR for risk budgeting, EL for credit risk, and Sharpe Ratio for performance. Combine with qualitative analysis (e.g., market trends).