May 23rd, 2018 at 10:33 am UTC · 2 min read
Huobi 10 Index selects 10 large scale digital assets with high market capitalization and strong liquidity. The purpose of the index is to accurately reflect the market performance of U.S. Dollar Tether (USDT) pairs on Huobi Pro.
New indices are also planned to be released in the near future to offer investors an array of indices choices. These indices will give investors a sharper snapshot of specific segments of the market, as well as funds a benchmark to compare against.
Launched with a base of 1,000 points, the Huobi 10 Index will be published in global financial communications agencies such as Bloomberg at a later date. In the pipelines, there are big plans set for the Huobi 10 Index.
Working towards the timeline of June 2018, Huobi Group is looking to launch another financial product, named ‘HB10’. It will be launched based on the Huobi 10 Index. Future financial derivatives are planned to be released based on Huobi 10 Index.
Taking into account key factors of digital assets, such as price, liquidity and other factors, the Huobi 10 Index will divide the digital assets into four categories: Coins, Platforms and Applications tokens.
The number of constituents in these four categories that will be included in the index is dependent on the transaction volume value of the last quarter.
Upon deciding the allocation of constituents into each of the three categories, the average daily trading volume in the previous quarter is used to decide the weight of the constituent in the index.
The weighting methodology utilizes advanced financial engineering such as asset classification and weighted average of trading volume analysis to create a digital asset index fit for financial products to benchmark against.
Huobi 10 Index has scored well against the Bitcoin (BTC). According to the historical data from March to May, the Alpha of Huobi 10 Index compared to BTC is -0.0028, while the beta of the index based on BTC is 0.79. This proves that Huobi 10 Index is effective in maintaining alpha while suppressing volatility.
The introduction of a financial index is a sign of the market achieving scale and entering into a stage of maturity. For example, S&P500 and MSCI Indices have become benchmark indices used by global portfolio managers. The Huobi 10 Index is a comprehensive index composed of a number of digital assets.
The index was compiled using world-class technology similar to traditional composite indices methodologies.