Choosing the right assets is more important than timing: Practical application of correlation and "offense-defense pairing" The previous article introduced the mechanism and parameter settings of rebalancing. After setting the rules, what determines whether rebalancing can truly be effective is which assets are included in the portfolio. This article is based on real price data from the OKX spot market and revolves around three questions: Where does the portfolio risk come from? Which assets placed together truly count as diversified? How to step-by-step build a portfolio that balances offense and defense? After reading, you can also use the five self-check questions at the end to review your own portfolio. Part One: Where does the portfolio risk come from? 1. A common phenomenon Many users create their first portfolio with BTC + ETH. After running such a portfolio for a while, rebalancing is rarely triggered; when the overall market declines, the portfolio's performance is not much different from simply holding the two coins directly. The parameters of this portfolio may be fine; the problem lies in the assets themselves. To understand this, we first need to clearly see what determines portfolio risk. 2. The risk of each asset itself: risk spectrum One of the most commonly used indicators to measure the risk of a single asset is volatility, which is the magnitude of price fluctuations. Arranging common assets by annualized volatility produces a "risk spectrum": During the same period, USDT has almost no volatility; xSPY about 11%; xQQQ and gold around 19%–22%; BTC about 36%; ETH, SOL around 50%; DOGE, PEPE, etc. M

Sell automatically when it rises, buy automatically when it falls: How exactly to set rebalancing? In long-term investing, the discipline of asset allocation execution often influences the final outcome more than the choice of a single asset. "Rebalancing Lab" is an investor education series launched by OKX Strategy Trading for Smart Portfolio users, combining conventional asset management industry practices with OKX Smart Portfolio's product capabilities to systematically introduce the core points of portfolio allocation, rebalancing mechanisms, and risk management. This series is planned to be divided into the following articles: Sell automatically when it rises, buy automatically when it falls: How exactly to set rebalancing? (this article) Choosing the right assets is more important than timing: Correlation and practical "offense-defense pairing" Putting coins, stocks, and gold in one basket: How to allocate stock tokens and gold After the portfolio is running: Editing parameters, immediate rebalancing, and regular review As the opening of the series, we start with the core mechanism of Smart Portfolio: rebalancing. The goal of rebalancing is not to pick the highest-yielding trading frequency from historical data, but to keep the portfolio's risk level always close to the target you initially set, while controlling trading costs within a reasonable range. 1. What is rebalancing? Rebalancing is a classic method with a long history in traditional asset management: when the proportions of assets in the portfolio deviate from the initial settings due to market fluctuations, buy or sell to adjust back to the target proportions. For example: you initially set 50% stocks + 50% BTC. After a period, stocks surge, and the portfolio becomes 70% stocks + 3