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Selling Data to Hedge Funds (2017)
- paulgb 6y agoThe article mentions having a long history of data, but I want to stress a corollary of this: if you think you might eventually want to sell data, either put your data in an append-only data format now so that history is preserved, or at least take regular snapshots. Otherwise, any time you update the data in place, you make it impossible to reconstruct what the data "looked like at the time" for a backtest.
- robswc 6y agoDefinitely agree. I'm not on the level of these hedge funds but I do love using data for trading.
- fractionalhare 6y agoYep. You typically need to incubate your data for several quarters to demonstrate a real correlation. And you have to balance how you prove this against the fact that some firms will try to reproduce the data collection internally once they learn how you get it.
- conformist 6y agoAbsolutely. Ideally, you'd want both, "append only" and a vintage of the corrected historical data at every point in time. And good metadata.
- jkinudsjknds 6y agoWhat do you mean by this? I'm imagining, say, rainfall per day, with a column for date, and a column for rainfall. What's useful about getting the data as it was vs. just having a total dataset with accurate dates.
- paulgb 6y agoFor something as simple as a sensor reading, you're right, the most natural way to store it is basically an append-only time-series database so it doesn't require much special care. But say the Rainfall table had a foreign key to a Sensor table that had the coordinates of the sensor. If the physical sensor were moved, the most straightforward data schema would call for the coordinates for the Sensor table to be updated, but then the historic data would have the wrong coordinates if you did a join. The ideal solution is to design a bitemporal schema so that rows are only ever inserted, not updated, but failing that, regular automatic database snapshots are a good start.
- threedots 6y agoI run a business in this space. Realistically your chances of having data that is useful to a HF (of any kind) is pretty low so I wouldn't bank on it as a revenue source unless you have a strong reason to believe (1) your data is predictive of something an investor cares about and (2) isn't already covered by other data.
- r_singh 6y agoCould I send you a sample? I’m curious about certain data I’m scraping for a project.
- fractionalhare 6y agoIf you shoot me an email I can tell you very quickly if it's viable, and direct you to specific people at firms who would buy it. I probably don't need a sample if you give an honest description of it.
- neolog 6y agoIs it better to provide the raw data, or to instead provide some interesting statistics from aggregating or running a model on the data?
- fractionalhare 6y agoUsually hedge funds prefer the raw data so their own research teams can do modeling and analysis.
- dtwest 6y agoDoes anyone else find it weird when a business like this uses the .org domain? Not to distract from the main discussion, just curious what people think on here.
- altdatathrow 6y agoIt's not a business. It's a stale content marketing effort ran by one of the incumbents in the space who leveraged it as a means to promote themselves in front of their competitors.
- maest 6y agoIndeed, you are correct (at least about being ran by the incumbents): > AlternativeData.org is supported and maintained by YipitData and sources its content from hundreds of contributing investors, data providers, and industry professionals. It would make sense for this to be aimed at data consumers rather than data producers, considering how the advice is, honestly, unrealistic.
- andrenotgiant 6y agoProbably should add a "[2017]" to the title of this post.
- logicslave 6y agoHonestly if you have a predictive data set, most likely it is more profitable to use it to invest yourself than it is to sell it. Its like a successful startup raising VC funding, the good ones dont need the investors, the bad ones do. Source is I used to work in this space. Clearly there are operational difficulties to investing and serious domain knowledge but if you have data with alpha, its worth insane amounts of money (seven figures a month).
- elevenoh 6y agoTrue. I'd ask: "If this data is truly useful in a financial market context, why are you selling it instead investing with it yourself? What data are you collecting that you're not* selling?"
- fractionalhare 6y agoThis is a good heuristic for the sale of trading strategies. If someone has a viable trading strategy, they should be raising capital or joining a prop shop instead of selling it. But it's not maximally rational to trade on data instead of selling it if you don't have any experience trading.
- whatok 6y agoAnd even if you're somehow able to figure out a trading strategy on this with no expertise, there are extremely few data sources that are actually proprietary so alpha decay is a very real thing.
- ed25519FUUU 6y agoIf the data made a few dollars per thousand dollars traded, it would take you a long time to make meaningful income from it, as opposed to a market maker.
- AznHisoka 6y agoBecause sometimes the data is useful when combined with other data you might not have yourself. Example: you have data on number of Netflix subs. That’s great. It would be even more useful if you combine that with Netflix churn data. You can think of company analysis as a jigsaw puzzle. You may have a few pieces. That by itself isn’t useful unless u have the other pieces.
- scottydelta 6y agoI recently published a data dashboard(https://public.quantale.io/dashboards/50778f4a-02bb-4d31-b6e7-13acefd63ce9 https://public.quantale.io/dashboards/50778f4a-02bb-4d31-b6e...) using Quantale[1] to show the correlation between Tweet activity of a stock vs the price during the recent stock split of Tesla and Apple. While I believe there are softwares that can collect such data which can definitely be useful to hedge funds but at the same time we should note that the data available to general public is most probably something these hedge funds already have since they have spent years developing systems to gather and analyze data to stay ahead of the curve. [1] Quantale (https://quantale.io/ https://quantale.io/) is a data collection and analytics platform my company is developing.
- Drblessing 6y agoHey this is really cool! I am a current data scientist masters student and would love to learn more about your platform! Do you have a way to contact?
- scottydelta 6y agothanks, I have my email on my profile.
- soniman 6y agoCan somebody give an idea of what are the most common alternative data sets that are the most widely used?
- thedudeabides5 6y ago1. Social Media Data - Twitter mentions etc 2. Website scraping (trolling linkedin, alexa, github) for evidence of activity 3. Credit Card Data - aggregate and POS data 4. Satellite Data - How many cars in the Walmart parking lot. Those are a couple of the more shiny alternative data set in terms of interest. A lot of quants also pay big bucks for more micro or hft data.
- soniman 6y agoThanks. I've wondered whether the Linkedin "people also viewed" could be used to predict M&A transactions.
- adrr 6y agoCredit card data would be the keys to the castle if terms of predicting revenue for a company.
- altdatathrow 6y agoTransaction data is widely available and considered table stakes today.
- hchz 6y agoEven apps like Tinder and Grindr are selling valuable user information to HF.
- miss_jackson 6y agoHere's how a few hedge funds use data in production 'Dexamethasone Announcement Could Have Made Hedge Funds A Fortune' https://www.alpha-week.com/dexamethasone-announcement-could-have-made-hedge-funds-fortune https://www.alpha-week.com/dexamethasone-announcement-could-...
- alexmingoia 6y agoNumerai hedge fund buys data anonymously, and pays you in cryptocurrency based on its performance: https://medium.com/numerai/building-the-last-hedge-fund-introducing-numerai-signals-12de26dfa69c https://medium.com/numerai/building-the-last-hedge-fund-intr...
- octoberfranklin 6y agoUm, how is this not an attempt to attract insider information? And trade on it?
- dougSF70 6y agoYou should check out decadata.io
- DeafSquid 6y agoThis was posted 3 years ago