How Data Analytics Helps Hedge Fund Investors

Andy White, Capital Markets CIO Outlook | Wednesday, April 22, 2020

Scraping data can help hedge fund investors make smarter, better-informed investment decisions before the rest of the market could catch on.

FREMONT, CA:  Sources say that it would take nearly 181 million years for a person to download all the data available on the internet today. This increasing data load is being observed by several industries, and the capital markets industry is not exempted from this. The hedge fund investors and managers deal with huge amounts of data, and analyzing it with the help of technology is sure to streamline investment operations, increase returns,  and maximize profits.   

The primary goal of data analytics is to uncover signals, patterns, and correlations that can help hedge fund investors outperform the market. Locating and sourcing data for information trends can lead hedge fund investors to an elusive competitive edge. Tech-savvy investors argue that the main benefit of including data analytics in the investment process is adding to the computer’s ability to spot patterns, which is beyond the human assistants' capability. However, humans will still explain investment ideas. It also provides hedge fund managers with additional ways for investment analysis by unearthing patterns, and insights.  

Having access to a massive and unique data set is not as easy as finding a bag full of market-beating beans. The ability to access, test, validate, and implement this unstructured data into an investment process is critical to making the data useful. As a result, firms now not only have to attract strong investment talent but also quantitative researchers with programming experience and data science backgrounds to aid in this effort.

Data analytics provides a tremendous competitive advantage in the hedge fund trading space. It seems that, soon, the application of data analytics will become a necessity for the entire industry.

See also: Top Data Analytics Solution Companies