Alpha theory

Alpha theory refers to a method used in financial investing to identify and capture investment opportunities that have the potential to outperform the overall market, known as generating "alpha." It involves analyzing various factors—such as company fundamentals, market trends, and valuation metrics—to make informed investment decisions. The goal is to select assets that are likely to deliver higher-than-average returns while managing risks effectively. Alpha theory is often employed by professional fund managers to improve portfolio performance, emphasizing disciplined analysis and strategic timing to achieve consistent, skill-based gains beyond what the broader market offers.