Concentration
Risk & psychologyAlso called: Position concentration
Holding a large share of a portfolio in few positions or one theme.
In plain terms
It raises both the best and worst outcomes. Size it so several going wrong at once is survivable.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Concentration risk
Risk & psychologyExposure arising because several positions depend on the same underlying driver.
In plain terms
Six bank stocks is one bet taken six times, at six times the size.
Customer concentration
Fundamental analysisA large share of revenue coming from one or a few customers.
In plain terms
Indian rules require disclosure above 10% of revenue. It caps margins as well as threatening revenue.
Investor concentration
Market basicsThe share of a fund’s assets held by its largest investors, disclosed alongside the liquidity stress test.
In plain terms
It tells you how few decisions it would take to produce a large redemption. A fund whose top holders own a big slice can face an exit that no retail pattern would ever generate.
Supplier concentration
Fundamental analysisDependence on one vendor or input with no ready substitute.
In plain terms
The mirror image of customer concentration, and disclosed far less clearly.
Liquidity pool
Technical analysisA concentration of resting orders at a price level, most often stop-losses.
In plain terms
Where the rain has collected. Large participants move price into it because that is the only place size is available.
Liquidity stress test
Market basicsA monthly disclosure by small cap and mid cap funds, in a format standardised by AMFI, showing how long the portfolio would take to liquidate alongside concentration, valuation and composition data.
In plain terms
Read it as an evacuation plan rather than a weather forecast. It does not say a fire is coming; it says how long the building takes to empty, which is a fact about the building and was measurable the whole time.
Average buy price
Risk & psychologyAlso called: Average cost, Weighted average purchase price, Avg cost
The quantity-weighted cost of a holding built up over more than one purchase, shown on the broker’s holdings screen.
In plain terms
A private number. The market cannot see what you paid and would not care if it could — managing the average instead of the position size is how a top-up quietly becomes a concentration.
Correlation
Risk & psychologyThe degree to which two assets move together.
In plain terms
Five banks is one bet, not five positions. Correlation is hidden concentration.