Hedge with
an edge.
Are you worried about your foreign currency exposure? Do you know how to protect yourself? Do your current tools provide consistent, reliable support?
C8 is here to help, providing a unique, web-based platform that delivers a powerful currency hedging solution. Gain the edge you need in a systematic way.
Whenever an investor acquires a foreign asset or a corporation engages in an international sale, effective management of both the asset or cash flow and foreign exchange exposure becomes crucial.
With C8's extensive decades-long experience in foreign exchange, you can concentrate on your fundamental business activities, whether it's selling or investing. C8's advanced FX models and expertise offer precise guidance for actively and optimally handling your foreign exchange exposures across multiple currencies.
C8 Hedge ratios rebalance monthly, whilst turnover constraints can also be included in the rebalance.
- Calculate optimal FX hedge ratios for all your currency exposures, both assets and liabilities
- Add risk weights for each currency exposure
- Calculate optimal FX ratios for each currency within a portfolio risk limit
- Use your existing FX execution implementation, no need for any integration work
- Keep full control of all FX hedging
Our Platform
Please test the C8 Hedge for USD, EUR and GBP, updated until {{chartsUntilDateText}}, with the demo below.
To learn more, please request an Account.
Dynamic Hedge Outperformance
EUR base vs USD Asset Hedge
USD base vs JPY Asset Hedge
GBP base vs USD Asset Hedge
EUR base vs CHF Asset Hedge
EUR base vs GBP Asset Hedge
EUR base vs JPY Asset Hedge
EUR base vs SEK Asset Hedge
EUR base vs NOK Asset Hedge
AUD base vs USD Asset Hedge
NZD base vs USD Asset Hedge
USD base vs CAD Asset Hedge
USD base vs BRL Asset Hedge
USD base vs MXN Asset Hedge
USD base vs CNH Asset Hedge
Why Consider FX Hedging?
- Risk Mitigation: FX hedging helps mitigate the risks associated with currency fluctuations. By employing hedging strategies, businesses can protect themselves from adverse movements in exchange rates, ensuring more predictable outcomes and financial stability.
- Stable Budgeting and Planning: Hedging provides a level of certainty in budgeting and financial planning. Businesses with international operations can control the impact of currency volatility on their budgets, making it easier to meet financial goals and projections.
- Protecting Profit Margins: For companies engaged in international trade, currency fluctuations impact profit margins. FX hedging allows businesses to safeguard their profit margins by locking in exchange rates.
- Facilitating Strategic Decision-Making: A well-executed FX hedging strategy enables businesses to make strategic decisions without being overly exposed to currency movements. This includes making investments, expanding into new markets or entering into long-term contracts with greater confidence in financial objectives.
Why Consider Active FX Hedging?
- Potential for Higher Returns: Unleash the power of active management to potentially benefit from currency movements, boosting returns beyond what a passive approach can offer.
- Adaptability to Market Conditions: Stay ahead of the game by adjusting strategies in response to changing market conditions – seizing opportunities and mitigating risks promptly.
- Customization: Tailor your strategies to your specific risk tolerances and business needs, ensuring a personalized approach that fits your exact requirement.
- Dynamic Hedging: Active management means dynamic hedging, actively shielding your portfolio against adverse currency movements.
Why C8 Hedge?
- Experience: The C8 team has decades of experience in currency markets at both major banks and funds.
- Deep Macro-Economic Expertise: C8 has a deep understanding of FX markets and modelling currency drivers as well as the intricate risks that multinational companies and funds face.
- Machine Learning Models: Harness the power of machine learning (ML) as C8 identifies patterns in historical data that are predictors of future currency movements.
- Statistical Models: In conjunction with ML, C8 delves into the relationships between currencies and macro economic factors, providing a comprehensive analysis of currency drivers.
- Tailored Solutions: No one-size-fits-all – use C8 Hedge to craft customized FX hedging solutions that align precisely with your unique needs.
Use Case 1: UK Exporter sells goods to EU
A UK company has received an export order for €50mio from France. The order will be delivered in 6 months time, the company investigates hedging the GBP to EUR FX exposure.
How much should they hedge?
- Macro model is ‘neutral’
- Intrinsic model is ‘positive’
- FX Hedge proposes fully hedging the EUR exposure by buying 100% of the GBPEUR amount
Use Case 1: Historical Hedge Performance
Use Case 2: EU Co. with multi-currency exposure
A EUR-based company has a mandate to hedge the next 6 months of net overseas revenue back into EUR:
- US: €300mio in USD
- Japan: €150mio in JPY
- Brazil: €50mio in BRL
How much should they hedge?
- Buying 60% of EURBRL exposure
- Buying 50% of EURJPY exposure
- Buying 80% of EURUSD exposure
Use Case 2: Historical Hedge Performance
The orange line gives the performance of the Variable Hedge (as proposed by C8 Hedge) versus the Static Hedge (where the position is always fully hedged for next 6 months receivables).
In this example, the variable hedge returns would have broadly flat over the past 16 years, whereas the Variable Hedge would have been up 30%.
Use Case 3: Swedish Co. assets and liabilities
A SEK-based company buys raw materials in USD and sells products within Europe:
- US SEK 100mio payable in USD
- EU SEK 200mio receivable in EUR
- UK SEK 50mio receivable in GBP
How much should they hedge?
Between 0% and 100% hedged, C8 Hedge proposes:
- Selling 20% of SEKUSD exposure
- Buying 90% of SEKEUR exposure
- Buying 80% of SEKGBP exposure
Use Case 3: Historical Hedge Performance
The orange line gives the performance of the Variable Hedge (as proposed by C8 Hedge) versus the Static Hedge (where the position is always hedged for next 6 months receivables).
The variable hedge performance includes both receivables in EUR and GBP and payables in USD.
Use Case 4: Asset Manager International Fund
A EUR-based asset manager runs an international equity fund holding shares in multiple currencies:
- USD: 60%, JPY: 15%
- USD: 60%, JPY: 15%
- MXN: 7%
What should they hedge?
Between 50% and 100% hedged, C8 Hedge proposes:
- Buying 90% of EURUSD exposure
- Buying 100% of EURJPY exposure
- Buying 50% of EURGBP exposure
- Buying 100% of EURCHF exposure
- Buying 60% of EURMXN exposure
Use Case 4: Historical Hedge Performance
Major Currencies: Multi-model approach
FX Macro:
Foreign exchange rates are driven by macroeconomic developments. For example, how oil price changes affect oil importers and exporters
The model rebalances monthly using:
- Relative Inflation and Growth
- Change in Stock and Bond Prices
- Change in Commodity Prices
- Enhanced Purchasing Power Parity *
* exchange rate that would equalise relative goods prices between countries
FX Intrinsic:
Using C8’s proprietary methodology, the FX matrix of currency pairs is broken down into pure currency indices, so each currency pair can be measured with respect to the corresponding intrinsic value. Such intrinsic currency indices are information rich and form the core of the trading strategy.
An exclusive C8 signal, this innovative indicator evaluates the relative strength of a trend concerning all major G10 intrinsic currencies simultaneously. This signal provides a comprehensive analysis of a prevailing trend's strength and effectiveness across the developed currency spectrum.
Rebalances Monthly.
FX Carry:
One of the best-known strategies in FX markets is the carry trade, as the return from owning higher-yielding currencies tends to be higher than that of lower yielding ones. As a general rule, it has been profitable to buy high and sell low yielders.
The C8 Generalised model extends this standard model by building a matrix of the yield differentials of the universe of 45 G10 currency pairs, comparing each currency against all other currencies in the G10. The model selects the top yielding currency pairs out of this universe.
Rebalances Monthly.
Major Currencies: FX Model Performance
C8 FX Macro model performance (running live since 2018)
C8 FX Intrinsic model performance (running live since 2020)
Emerging Markets: Multi-model approach
SERV* model:
Medium-term value based on Terms of Trade, Commodity prices, US Dollar and US yields
*Structural Exchange Rate Valuation
Snap-back model:
Counter-trades excessive FX weakness compared to fair value over recent months
Long-term FX Drivers - Z-score*:
FX Value (against PPP) and FX Carry
*Variation from the expected mean
KnowledgeHub
Thoughts From The Divide: An Inevitable Recession? –Surprise! (An Interview)
Contact
C8 has its offices in key locations.
184-186 Regent Street
London
W1B 5TW
477 Madison Avenue
New York,
NY10022
Lee View House
13 South Terrace
Cork
Ireland
Rooms 1101A-4
China Evergrande Centre
38 Gloucester Road
HK
C/ Matias Turrión 24 Bis 1º
28043 Madrid
Spain
Via Olona 12
20123 Milan
Italy
Room 3AN204F
Kerry Parkside
1155 FangDian Road
Pudong District
China
C8 is a fintech company that believes in empowering its clients through technology, giving users the freedom to choose, combine and trade strategies sourced from its platform.
C8 Technologies was established in 2017 in London by Mattias Eriksson and Ebrahim Kasenally, previously partners and senior executives at BlueCrest Capital Management - one of the largest global alternative investment management firms. C8 combines decades of investment research with experience in innovative trading technology.
Follow the link for more information: c8-technologies.com
MATTIAS ERIKSSON
Founder & CEO
- Founding Partner: C8 Investments 2011-17
- Partner & Head of Systematic Implementation at BlueCrest 2003-10
- HSBC, Deutsche Bank:1998-03
- Ericsson, Financial Software and Virtual Reality Companies 1993-1998
EBRAHIM KASENALLY
Founder & Chief Research Officer
- Head of Research C8 Investments 2012-17
- Partner & Senior Researcher at BlueCrest 2002-12
- Bank of America, HSBC & ADM Investors: 1994-02
JONATHAN WEBB
Product Manager FX
- Managed WebbWorldWideFX Advisors 2015-18
- Head of FX Strategy, Jefferies 2010-15
- FX Proprietary Trader/HF Portfolio Manager (C-View, RBS, DASCM, CSFB, HSBC, BoA) 1989-2010