From QuantLabs.net 3: “Scanning hot sectors for market trading within UK “

And the number 3:

Scanning hot sectors for market trading within UK

A quick run down on which market sectors could get hot within the UK. These could be very useful to break

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Image of the UK flag: Wikipedia.org

From QuantLabs.net 2: “Scanning hot sectors for market trading within Europe “

The second installment from Quantlabs.net. This time on trading opportunities within European Union:

 

Scanning hot sectors for market trading within Europe

A quick run down on which market sectors could get hot within what country of the Euro Area. These could be very useful to break down trading opportunities by country and economic trading for ETF or indices.

 

10530873-european-union-logo-600x300

 

 

From QuantLabs.net: “Scanning US markets for hot sectors to pair trade or arbitrage “

I recommend followers of Insight Corporation to check this Blog and this post in particular. Why?  It is about the list of Videos and the supporting material found in there to help the interested get a grip on Algorithmitic Trading:

Scanning US markets for hot sectors to pair trade or arbitrage

Here are my first set of call with this potential Pair Trading/Arbitrage strategy. This will be part of my Algo Trading Course in Python which you can find here

These are my ‘market calls’ as explained in my video. Just remember my disclaimer that I am not a register financial advisor and these are only for research purposes!

I will check back in a few weeks to see how these did

First call Mar 7:

 

REIT-Residential

 

Long EQR Short OAKS

 

Mortgage Invesment

 

Long LEN Short BZH

Mortgage Investment

Long HTGC Short JGW

 

And here it is Bryan Downing – the founder – talk about the issue in the post: the strategy of pair of stocks trading: ” Scanning US markets for hot sectors to pair trade:



 

More attention to be paid to Quantlabs.net in Insight Corporation

I would like to say that I must pay more attention to a fellow Blogger here at Insight Corporation. His name is Bryan Downing and he is from England, but lives in Toronto, Canada. He is a Software geek and expert with a knowledge base in Trading and Financial Markets.

Without a regular schedule I will post and re-post editions of Bryan’s Blog: Quantlabs.net. Specially on these topics: Quantitative Investment Strategies, Markets Infrastructure, Trading Algorithms and Risk Management technologies, which are ones where I see to be of mine and Bryan’s interest and expertise. I recommend also everyone to follow and check the Youtube video channel for the Blog.

Today’s post:

Smart beta crucial to measure trading risk

Smart beta crucial to measure trading risk

This is an import risk metric I use to assess when choosing a long vs short in my upcoming Abritrage Phase of upcoming trading course. See video below to see detail of this next phase which should start early May

 

risk

 

The fork in the Hedge Fund industry

Today I return here to Insight Corporation posts. This time with a nice, informative and helpful article in Financial Times about what is going on in the so often mysterious or misunderstood Hedge Fund industry.

To wit here they are some of the best  pasts from the article:

M&A arbitrage is a good example of a highly specialised hedge fund strategy that the “quants” now say they can mimic. “Arbs” place bets on whether corporate acquisitions will fail or succeed. When a company makes an offer for a rival, it will typically offer a premium price — but there is always a danger that the deal collapses, so the shares typically trade slightly below the offer price.

Skilled arb funds — typically stuffed with corporate lawyers, antitrust experts and former investment bankers — buy the shares of targets when they think the deal will go through, and short the ones where they think the deal will fizzle. The risk is in practice binary, and the better the fund, the more accurate its predictions.

Enough deals go through that even average M&A arbitrageurs should make money over time, as they capture what Mr Romahi calls the “deal failure risk premium”.

But quants now think they can do even better than simply systematically buying acquisition targets, by studying history for what deals go through and which fail, and automatically weighing their bets accordingly.

 

And the bifurcation in the industry appears to happen on different approaches and strategies. Some with the quant computer driven models and others just involving Human Intuition and business acumen. But is there really a battle of paradigms, or a diversity of ecosystems not mutually exclusive?:

But he has identified a multitude of factors that affect the M&A strategy’s success rate, using the same statistical techniques that doctors use to determine how long a cancer patient has to live.

As is often the case with quants, they are confident that their mathematical approach produces better results than human intuition. The traditional M&A arbitrageurs are “good but often not very accurate. Our model has actually proven more accurate than the arbitrage funds”, Mr Luo says.

M&A arbitrage is just one of many popular hedge fund strategies whose secrets quants say they are now deciphering. Others include global macro — betting on the ebb and flow of international interest rates and currencies — and even activist strategies pursued by the likes of Dan Loeb’s Third Point, Bill Ackman’s Pershing Square and Carl Icahn.

I will honestly bet that a somewhat healthy co-existence of all the strategies to be in the interests of everyone. An in academia sometimes the theoretical view isn’t so that far off reality:

While the quants have crunched their numbers through supercomputers their models for what works are based virtually entirely on “backtesting” against historical data. The financial crisis showed how a slavish adherence to modelling can spectacularly blow up in real-life markets, either immediately or eventually.

“I have very little regard for these hedge fund replicators,” says Robert Frey, chief investment officer at FQS, a fund-of-hedge funds and a quantitative finance professor at Stony Brook University. “They all fail miserably when the market regime shifts.”

 

I wish you all good trades and strategies: be they quantitative or intuitive!

” #Hedge #fund managers are arguably the celebrity chefs of the money management industry. They are best able to whip up…

Posted by Insight Corporation on Friday, February 19, 2016

Featured Image: BusinessWeek Slams “The Hedge Fund Myth”