Risk Assesment

Pillious LongTerm risk description

We want to give you insight into the known risks of buying and selling financial instruments. As with any other investment, including in single shares, there is a risk of loss that cannot be determined in advance, with investment in Pillious momentum, just as past returns and price developments cannot be used as a reliable indicator of future returns and price developments.

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RISK MEASURED AS VOLATILITY The EU has created a common risk scale, which is divided into seven categories, where category 1 is low risk and category 7 is high risk. It is leverage and shorting which will be marked as a red color. The scale is based on how risk versus return is typically related. Investment risk is, according to EU guidelines, the annualized standard deviation of weekly returns over a 5-year period, that is, fluctuations in weekly returns. The current category for Pillious is 3 out of 7 in the long term momentum this is our own assessment.

GENERAL RISK OF THE DAYTRADING STRATEGY The shares for the long-term portfolio are selected on the basis of momentum calculations, so that the shares that exhibit the best price momentum at the time of calculation are usually purchased for 10% of the portfolio. The biggest risk in the momentum selection in Pillious is thus performance-related, which means that there is a risk that the shares purchased are not the ones that subsequently increase most as expected, if the performance is not within 1 week it is not something we want on the books longer as we only want the best of the best stocks, you as a stock analyst can be wrong and sometimes you just have to sell with a small loss (-1.5%) when it turns out it did not perform as expected and a new quality stocks must replace.


The portfolio may consist of 10 individual shares from the S & P500, Nasdaq and Dow Jones 30. The value of each share can fluctuate greatly in value relative to the overall market, and there is a risk that a single company will lose all or part of its value, however, we will monitor the stock closely within, to ensure that there is not the biggest volatility before the purchase, however, it cannot be ruled out that it exhibits unforeseen fluctuations in buying if it does not continue its steady fluctuations in an upward trend we can cash out even if we have nice returns so far. In order to minimize this risk, we only invest in individual stocks in the elite indices and not invested in small indices with a lack of liquidity. In addition, we only invest in shares that have been listed for at least one year.



Financial markets can sometimes fluctuate greatly in value so it is important to understand this before you start investing in shares. In such circumstances, stocks across countries and sectors will often correlate more than usual and therefore you need to have a tight stop loss policy and investment strategy to follow if you want to best insure yourself against crises and crises in the market, in these cases corporate and sectoral diversification does not necessarily help to mitigate the effects of such fluctuations, as they often occur on a global scale. The movements may therefore affect the value of the shares in one’s portfolio, so it is important to stay within or to have a distribution of several shares in the portfolio with different weighting. If you close the positions at -2% or due to lack of performance this is preferable in a troubled market.


The investments in Pillious LongTerm Momentum can be concentrated in both specific countries and sectors, if these show higher momentum than other countries and sectors we see this as an attractive opportunity to make excess returns, however, it should be mentioned that if you join up to follow the Danish momentum portfolio it is the Danish stocks that come as soon as you expand and add other countries, the above could well happen if the opportunity seizes. In the case of concentration risk, the greatest risk will be associated with sectors rather than countries, as concentrations in sectors reduce the diversification advantage to a much greater extent than a country concentration. To counter this, the Pillious LongTerm portfolio has a sector limit of 20% of the portfolio value in the ongoing rebalancing of the fund. Between rebalancing, a sector may for some time exceed the 20% as a result of overperformance.


Our investment strategy is based on trading in a country with the same portfolio, so you have no currency risk unless you choose to buy our other portfolios in the world, the US portfolio as non-US citizen, which runs a currency risk as the dollar can be very volatile in uncertain times. Therefore, in our US portfolio, we are exposed to currency risks, which adds a layer of risk to the existing exchange rate risk if you are not a US user, investment in securities always entails a risk of loss. By being long-term in a stock, you are also long and exposed in the dollar, and therefore in the worst case scenario you can lose on your investment even if the stock has increased. In Pillious LongTerm Momentum, currency exposures to equities in foreign currencies are uncovered, but we naturally want to take into account long-term currency cycles without having to hedge through derivative financial instruments.


Deposits, i.e. Having a portion of the portfolio funds in the bank is not part of the investment strategy. Due to denomination conditions, holidays and redemptions and issues, deposits may occur periodically, very briefly possibly with large amounts when the share is entered or withdrawn with large amounts. During such periods, there is a risk that the counterparty, in this case the bank, will be unable to meet its obligations.


Unforeseen and unpredictable events in the financial markets may mean that the shares in the portfolio can no longer be sold as we had planned, since there must be a buyer for the shares on an ongoing basis. Sudden crises and negative events, as well as collapse of the stock exchange or closure, could significantly increase liquidity risk. In order to minimize liquidity risk, the investment strategy is centered solely on highly liquid stocks from the world’s leading indices dow30, S & P500 and Nasdaq, and shares can only be purchased for the portfolio, which at the time of purchase is part of the official elite indices in the countries included in our the momentum strategy if the shares do not carry out our ESG screening, they will not be included in the portfolio. In spite of this, it cannot be guaranteed that the above events will not affect the price or rate at which we will be able to buy and sell the shares.

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