Neudata’s launched an alternative data use-case research platform so that investment managers can track how a dataset turns into alpha.
The research service is available as an added feature to the firm’s digital data intelligence platform.
“Our new alternative data use-case research library encompasses any material which demonstrates how an alternative dataset is used in investment management toward a particular strategy, or investable index investment theme, or specific analysis purpose,” said Rado Lipuš, CFA, Founder and CEO of Neudata.
“Use-case research provides clear evidence – such as through backtesting or modeling — as to how a particular dataset can be useful in generating alpha,” he added.
The alt data research tool combines voluminous data from academia and sell-side investors, as well as independent and Neudata’s proprietary research. It’s designed to educate investment managers about existing alpha evidence research.
The huge amount of alternative data means investment managers need to tackle understanding what kind of evidence of alpha generation is available.
This could include knowing how to best leverage alt data such as e-receipt datasets for specific themes, and for which investment instances datasets – such as ESG (Environmental, Social, and Governance) – can provide alpha generation.
Moreover, targeted alternative datasets can prove critical in potentially identifying investment failures, such as the insolvency, bankruptcy and liquidation of UK construction company Carillion, as an example.