quincunx

How to see order in chaos?

A presentation about risk, from the Uluburun shipwreck to the CAPM
Crina Pungulescu
The universal story

Risk and Loss

First Response

Pray

Risk Pooling

Insure

Expected Value

Measure

Best of 5 coin tosses wins. What if the game is unfinished?
coin
Player A (Heads)
0
Player B (Tails)
0
Tosses so far: 0 / 5
Probability of winning the match
Player A: 0% Player B: 0%
Fair split of the wager
0%
0%
Click the coin or the button to toss. After 5 tosses, next toss resets the game.
Central Limit Theorem

The Riddle of the Quincunx

"I know of scarcely anything so apt to impress the imagination as the wonderful form of cosmic order expressed by the Law of Frequency of Error. The law would have been personified by the Greeks and deified, if they had known of it. It reigns with serenity and in complete self-effacement amidst the wildest confusion. The huger the mob, and the greater the apparent anarchy, the more perfect is its sway."
— Sir Francis Galton, Natural Inheritance (1889)
Stochastic Universe

The Random Walk

Any single path is unpredictable. But in the aggregate motion, there is mathematics.
The Theory of Speculation

29 March 1900

Options

A(nother) Greek Invention

Diversification

Invest in Many Ventures

Return and Volatility

Greed and Fear

Systematic Risk

Market Risk Exposure