Tuesday, August 14

ML for the buyside to calculate geopolitical risk in macro trades

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Quant Insight and  Predata are combining global geopolitical risk signals with macro analysis for the buyside. 

The idea is that institutional investors, like hedge funds and wealth managers, as well as traders, can quantify political risk for investments and trades on assets. 

“Having the expertise to know which data is relevant, how to interpret that data and translate it into actionable investment ideas is crucial in today’s trading environment,” said Mahmood Noorani, founder and CEO at Quant Insight, in a statement. 

He added that the partnership means financial market participants can evaluate both economic and geopolitical factors when choosing a trade expression that best suits their macro view.

 

Read MarketBrains indepth interview with Quant Insight’s Noorani

 

Quant Insight is a macro research firm based in London that provides actionable quantitative analysis to hedge funds, asset managers, pension funds and wealth managers. 

For examples, a macro money manager may need to know what drives their FX trade or duration position, or an equity long-short fund whose bottom-up investment process needs greater insight on potential exogenous shocks. 

New York-based Predata builds models of human behavior online using alternative data and machine learning techniques to identify and map patterns that precede major market and political events.

The data and models are then transformed into risk signals, market indicators, and political and economic event predictions. 

Predata’s global risk intelligence has helped hedge fund portfolio managers and global macro strategists discover and quantify risk around geopolitical and market events such as attacks on UN Peacekeepers in Mali, PKK violence in Turkey, and flare-ups in tension between Saudi Arabia and Iran.

Also, in February Predata used its platform to predict a move in Japanese Yen one week in advance of the actual USD/JPY increase.

“Together [with Quant Insight], we’re delivering a powerful source of analysis to financial professionals looking for alpha strategies using alternative data, machine learning and innovative quantitative techniques,” says Hazem Dawani, CEO of Predata.

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