Radar Perene / Archive / science

Perene Risk: the index with a DOI and no public formula — and why that is the right choice

◦ Index methodology v2.2 (working papers with DOI). See the methodology.

Science

There are two ways to hide a method. The first is the classic secret: nothing published, nothing verifiable, trust us. The second is subtler and more common in the market: publishing so much promotional material about the indicator that no one notices the absence of what matters — what it measures, with what data, since when, and who answers for it. Between the two extremes there is a third position, less comfortable than either, and it is the one this house chose for its risk index.

The Perene Risk Index has a public working paper, deposited with a permanent DOI — The Perene Risk Index, currently at version 2.3 — that declares the concept, the question the index answers, the data sources and the instrument's limits. What the paper does not hand over are the weights and the calculation formula. That combination — auditable concept, reserved mechanics — is a deliberate editorial choice, and this article exists to defend it in the open, rather than let it look like a badly kept secret.

What the DOI buys

A DOI is not an academic ornament. It is a three-layer public commitment, as Track 1 details in what Zenodo is: the document cannot be silently edited, the versions are preserved with dates, and the citation points forever to the same object. For a market index, this means the concept declared in 2024 cannot be rewritten in 2026 to match what the index did in the meantime — the favorite maneuver of promotional indicators, which retroactively adjust their own definition to their own performance.

Anyone who wants to hold Perene Risk to account therefore has a public contract to hold it against: what the index claims to measure is written, dated and frozen in each version. The daily reading published in the Diário can be checked against that contract by any reader, at any time. That is auditability of concept — and it is more than most commercial indicators offer.

What the closed formula protects

The honest objection comes next: without the weights, no one can reproduce the number. True — and the house prefers the objection spoken aloud to pretending it does not exist. The answer has two parts.

The first is economic and wears no disguise: the calculation mechanics are the asset that sustains the operation. An independent research house, with no attached financial product and no sponsor, finances itself by what only it knows how to do. Opening the formula would mean donating the craft and keeping the costs — a model that does not survive, and a dead house's indicator audits no one.

The second part is methodological and less obvious: an open formula is not a synonym for honesty, just as a closed formula is not a synonym for fraud. An indicator with a public formula may have been born from retroactive fitting to the data and go on misleading with full transparency; an indicator with reserved mechanics can be disciplined by a public conceptual contract, dated versioning and a daily reading exposed to error. The fraud lives in the process, not in the degree of openness. What separates the two worlds is the existence of verifiable commitments — and that is where the house concentrated its openness.

Transparency is a budget, not a binary virtue

The Perene Risk choice becomes more legible once one abandons the idea that transparency is all-or-nothing. Each element of an index can be opened or reserved independently: the concept, the sources, the historical series, the weights, the revision process. The house treats this as a budget to allocate — and allocates it unevenly on purpose. The concept and the limits: public, with a DOI. The readings: published daily, exposed to accountability. The versions: preserved, with the changes in view. The mechanics: reserved.

It is not the only possible allocation, and the house's own working paper series contains a deliberate exception — an index whose weights are entirely public, for reasons that deserve their own article later in this trail. The coexistence of the two choices in the same body of work is the argument in action: openness is not dogma, it is a case-by-case decision, and what is non-negotiable is that the decision be declared.

The test the reader can apply

The standard travels beyond this index. Faced with any proprietary indicator, the useful question is not "is the formula open?", but: is there a public, dated, immutable document saying what this measures and where it fails? Do the old versions remain accessible? Does today's definition match yesterday's? A provider that answers yes to all three has agreed to be held accountable. One that answers no to all of them is asking for faith — with or without a formula on display.

Frequently asked questions

Without the formula, what exactly does the DOI guarantee?

It guarantees the conceptual contract: what the index measures, with what data and within which limits, in dated versions that cannot be rewritten. It does not guarantee independent reproduction of the number — and the paper does not claim otherwise.

Will the formula ever be opened?

There is no promise in either direction. What the trail records is that the house has already fully opened the mechanics of one of its indices when the reasons favored openness — the decision is per instrument, not by general principle.

Does "version 2.3" mean the index changed?

It means the document evolved and the evolution is on record: each version preserved in the repository shows what was revised. It is the opposite of silent editing — change with a trace is part of the method, not a confession.

How can one trust a number one cannot recalculate?

Not by trusting blindly: by checking the published reading against the public contract, over time. The index exposes itself daily to that accountability — and an exposed track record is a form of verification that open formulas rarely face.

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Continue the trail: Structural Ânima: measuring a kind of risk that does not show up in the price →

House reading: today's reading of the index is in the Diário; the episodes in which it was tested by the facts, in the Atlas.

Understanding what the index's reading says — and does not say — about a specific scenario is a conversation the house has case by case; the formula is not what changes hands in it.