Better than crypto...hedge fund strategy

Investing in a ship is better than investing in crypto. Because it is more real, you can feel and touch a ship!

Hedge funds that specialize in shipping markets, have special challenges.

STRATEGY

Derivative market developments may play a key role in their strategy. When the derivative market for a particular route and vessel type is well developed, hedge fund strategies are easier to follow through. This is slightly surprising.

From the rest of the information it appears that arbitrage strategies can work well sometimes.

Especially when there is a lack of accuracy in the values of derivative tools compared to their underliers.

One may easily surmise that a well-developed derivative market would have more accurate prices. Upon closer examination, however, the reasons for this seemingly peculiar opinion becomes clearer.

DERIVATIVE MARKET DEVELOPMENT

The level of development in the derivative markets influences a hedge fund in two ways.

One is the number of tools available on the market in terms of trade-able futures, stocks, freight rates, and physical assets.

This has reached an advanced point in most industries. That in turn then allows little room for creating extra tools by, for example, combining two or more others.

EXTRA TOOLS

There is another side to the development of derivative markets.

Another aspect that influences hedge fund operations has to do with how sophisticated each tool has become in terms of being an accurate predictor or mirror of certain market operation.

This second issue is the one that matters most for hedge funds that operate in arbitrage and speculation.

In the execution of some strategies, they may prefer these tools and their use to be relatively undeveloped. That may provide more opportunities for buying and selling on spot prices and futures.