Financial risk forecasting analytics can provide several hours or even days of advance warning of any major directional market movement. This is done by analyzing data generated by market participants on various exchanges around the world. Once you are able to identify a potential anomaly you can then exploit these market shifts to profit from them.
You could also use these analytical tools to secure your existing portfolio by hedging in anticipation of market movements. Created by Amadeus Capital Partners, the AlgoDynamix risk engine is an analytic tool that uses sophisticated ‘deep data‘ algorithms to analyze the changing behavior of market participants.
AlgoDynamix uses unsupervised machine learning algorithms to analyze market movements in real-time. The financial product is based on what is currently happening instead of relying on historical data. This unique program backed by Artificial Intelligence is based on behavioral finance theory and cluster identification, economic theories that were developed at Cambridge University in the UK.
The tool is currently being used by asset managers to improve their portfolio metrics. Other notable customers include wealth managers, hedge funds, investment banks and trading houses in the United States. You can choose from a choice of three different products depending on your needs.
The risk analytics engine uses agent-based algorithms to scan in real-time multiple quantitative primary data sources. These algorithms then analyze the dynamic behavior of market participants – i.e. buyers and sellers and cluster them based on common feature sets. Noise classification, cluster identification and behavioral finance theory are part of its unique core capabilities.
AlgoDynamix analytics engine has been thoroughly tested across different sectors and economic cycles and has delivered stable performance and given insights that no human would have been able to identify.
The tool was nominated in the Artificial Intelligence category at the inaugural edition of Cambridge Independent’s Entrepreneurial Science and Technology Awards. The winners will be announced towards the end of September 2017. Take a look at a pitch delivered by its creators in September 2015 at 3 Beards to further understand their product.
The Future Of Finance And Trading
Artificial Intelligence backed by machine learning is slowly taking over the role of human decision-makers in the hyper-competitive world of investment management. Artificial intelligence has led to the development of Robo-advisors that makes human financial advisers seem redundant.
The development of Neural networks is also increasing the scope of machine learning. These networks are modeled on how the human brain works and processes information. In the world of Fintech, this is being used to mitigate risk and secure data.
A common use of machine learning programs is in the credit assessment of prospective loan applicants. Programs can evaluate an applicant on thousands of different parameters to determine his eligibility for a loan. This is enabling companies to issue loans faster and reducing defaults.
The proliferation of Robo-advisors and algorithmic trading has caught the attention of regulators who are scrambling to monitor them. It is going to be difficult to police these systems because of their complexity and diversity. Most regulators are holding consultations on whether they should adopt a technologically agnostic approach to the regulation of these entities. Only time will tell, watch this space for updates!