Forefront Communications

Hedge Week: Taking Full Advantage of Data

Luminex

Alexandra Hamer

Alexandra Hamer

The growing computing power witnessed in the past few years has led to data becoming more accessible, often at the touch of a button. Though there are huge benefits to this, the progress also means the danger of information overload is an unfortunate reality. As more alternative datasets become available to hedge fund managers looking for a competitive edge, they need to make sure they take full advantage of any data they purchase while also incorporating any information they share across their internal company channels.

Support for such an endeavour can come from a firm like Causality Link. “Our research assistance tool works as the ultimate brain sitting in the middle of a firm, reading everything on the portfolio managers’ behalf,” says Eric Jensen (pictured), Co-Founder and CTO at Causality Link.

Causality Link’s AI-powered research platform extracts the “causal knowledge” contained within millions of documents and other text-based sources to provide investors and analysts with a unique perspective on companies, industries and macroeconomics.

Pierre Haren, Co-Founder and CEO at Causality Link talks about the challenge professionals face in trying to read everything they should: “The first reason people read is to understand the evolution of the drivers of the data and potentially the future evolution of those drivers. But they also read to build a model in their head that enables them to grasp the consequential impact of different events.”

The platform Causality Link performs both of these tasks for managers. It provides a “wisdom of crowds” point of view of the evolution of almost any driver in the world, but it also gives clients a unique causal model that has been extracted from the knowledge of documents they don’t have the time to read.

A further challenge emerges as a growing number of managers look to use alternative data. With such widespread adoption, there is a risk of these datasets becoming commoditised and therefore losing their differentiating power. The answer to avoiding this fate lies in a firm’s own internal knowledge.

Jensen elaborates: “Our vision is to extend our platform’s capabilities to not only read the news but to enable it to also read internal proprietary research. This way each customer gets access to a bespoke system that superimposes those different layers on each other and tries to identify any incoherencies or inconsistencies which the manager can leverage to their advantage.”

In practice this means the platform will integrate the datapoints drawn up by Causality Link’s analysis, together with any other alternative dataset the manager has purchased, and overlay it with the firms’ internal analyst emails and notes.

Haren adds: “By accessing our services through the Data as a Service (DaaS) system, managers can extract aggregated data from our busy and large data flow which can be instantly merged with any data they have originating from other sources.”

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