Research preview

The recent public display of a long‑range intercontinental ballistic missile and a separate test of a tactical ballistic missile by the Democratic People’s Republic of Korea have injected fresh geopolitical risk into global markets. For quantitative traders, such events are not just headlines; they can alter pricing dynamics, volatility regimes, and the correlation structure of asset classes. This article explains how to translate the underlying risk into a robust statistical framework and apply it to model building and portfolio management. Quantifying Geopolitical Shock as a Stochastic Process Geopolitical events can be treated as jump components in asset price dynamics....