Methodology & Logic

The Science Behind
Portfolio Health Analysis

Discover the mathematical formulas, intelligent algorithms, and expert-designed rules that power our portfolio analysis engine.

Step 1

Risk Score Calculation

We don't just guess. Your portfolio's risk score is a weighted average of the individual risk levels of your funds, proportional to their investment amount.

Formula
Risk Score = Σ (Fund Amount × Fund Risk) / Total Investment

Where each fund's contribution is weighted by its allocation percentage

Live Example
Large Cap Fund
₹3000Risk: 3
Mid Cap Fund
₹2000Risk: 6
Flexi Cap Fund
₹3000Risk: 5
Gold ETF
₹2000Risk: 4
Portfolio Risk Score:4.4/10
1-3
Conservative
Low volatility
4-6
Balanced
Moderate growth
7-8
Growth
High returns
9-10
Aggressive
Maximum risk
Step 2

Diversification Analysis

True diversification isn't just about owning many funds. It's about spreading across uncorrelated categories. We analyze your allocation spread to ensure you aren't overexposed.

Concentration Check

Detects over-concentration in a single category (e.g., >40% in Small Cap). Ensures balanced exposure across market caps and themes.

Stability Anchors

Rewards presence of stabilizing assets like Large Cap funds or Gold ETFs that reduce volatility during market downturns.

Style Overlap

Penalizes overlapping investment styles that create false diversification. Similar funds don't multiply protection.

Category Balance

Optimal mix across equity, debt, gold, and thematic funds based on your risk profile for maximum risk-adjusted returns.

Scoring System
Well-diversified (4-7 categories)+20 points
No single category >35%+15 points
Includes stabilizers (Large Cap/Gold)+10 points
Maximum Diversification Score100/100
Step 3

Red Flag Detection Engine

We run your portfolio against 8+ critical rules designed by financial experts to identify potential pitfalls before they hurt your returns.

Too many funds (>10)High

Over-diversification reduces returns

Sectoral fund exposure > 20%High

Single sector concentration risk

Small Cap exposure > 30%Medium

Excessive volatility exposure

Missing Large Cap stabilityMedium

No downside protection

Thematic funds > 25%High

Speculative bets too high

Overlapping fund categoriesLow

False diversification

No Gold/Debt allocationMedium

Missing safe havens

Aggressive fund overlapHigh

Compounded risk exposure

Smart Detection

Our engine doesn't just flag issues—it explains why each red flag matters and how it impacts your portfolio's risk-return profile. Each warning comes with actionable insights for improvement.

Why Our Analysis Works

Built on proven financial principles and real-world investment strategies

Data-Driven

Every metric is calculated using mathematical formulas, not subjective opinions. Your risk score is precise and reproducible.

Expert Rules

Red flags are based on industry best practices and decades of investment research. We identify what professionals look for.

Instant Insights

Analysis happens in real-time, right in your browser. No waiting, no data sharing—just immediate, actionable feedback.

Ready to Analyze Your Portfolio?

Put these formulas to work on your actual mutual fund investments. Get instant risk scores, diversification insights, and red flag detection.

Start Portfolio Analysis