Risky business

At the heart of modern-day finance is the notion of a game played with lots of financial instruments, each with a nexus of risk and return. The object of this game is to find those instruments, or portfolio of instruments, that maximise your return for a given degree of risk, or minimises your risk for a given return.

In recent years, advances in data and technology have digitised this game: the risk and return of instruments have been broken up into pieces, correlated and repackaged together in