Optimise this

One of the reactions to recent energy trading difficulties has been a shift away from speculative activities towards portfolio optimisation, but what does the term really mean, ask Tim Essaye and Brett Humphreys

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Our trading business is focused on portfolio optimisation, not speculation,” says the chief executive of a major energy company. This statement, in one form or another, has become a fairly common one in the power and gas industry over the past year. Recent market events have required management to revisit and potentially redefine the role of the energy trading group.

But what does portfolio optimisation mean? Merriam-Webster’s dictionary defines optimisation as the process by which one attempts

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