It simulates mean, variance, skewness and kurtosis. It simulates the market risk and the specific risks of each Hedge Funds separately. The Hedge Funds are correlated only by their specific risks.
Investors are able now to compare different choices by looking at extreme negative events.
This is called a downside risk management. 250'000 random numbers are simulated and 21'000 are stored in a database and used to draw the graphs.