[HN Gopher] Selling Data to Hedge Funds
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Selling Data to Hedge Funds
Author : r_singh
Score : 71 points
Date : 2020-11-01 09:11 UTC (1 days ago)
(HTM) web link (alternativedata.org)
(TXT) w3m dump (alternativedata.org)
| threedots wrote:
| I 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.
| dhairya wrote:
| Out of curiosity what resolution and time scale is useful. Is
| it fair to assume the most hedge funds are relatively good at
| tracking recent information and the value is in older archives
| that's hard to collect?
|
| Also are event streams and large connect event graphs like
| Forge.AI what sells actually useful?
|
| Curious as my phd research potentially has applications for
| information extraction and event linking. But not entirely sure
| if those applications are actually valuable
| ed25519FUUU wrote:
| I'm curious the types of data that _are_ useful, what goes into
| them, and what the curators of that data might make for them.
| fractionalhare wrote:
| There are also ways to reliably find and curate this data for
| trading firms and asset managers. But that usually requires a
| somewhat uncommon blend of skills; like statistics, web
| scraping, reverse engineering, or some domain expertise that
| gives you an edge in (legally) finding and using nonpublic
| data. Scrappiness also helps a lot.
| crb002 wrote:
| Trying to get my credit union to allow users to opt in to sell
| bulk annon checking account transactions to a hedge fund.
| Having that much point of sale data would be huge.
| r_singh wrote:
| Could I send you a sample?
|
| I'm curious about certain data I'm scraping for a project.
| fractionalhare wrote:
| If 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 wrote:
| Is it better to provide the raw data, or to instead provide
| some interesting statistics from aggregating or running a
| model on the data?
| logicslave wrote:
| Honestly 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 wrote:
| True.
|
| 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?"
| ed25519FUUU wrote:
| If 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 wrote:
| Because 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.
| whatok wrote:
| What you're saying is correct but also puts a non-
| sophisticated seller in a poor negotiating position. They
| do not know what existing data the buyer uses or how their
| data can be complementary to anything.
| ethbr0 wrote:
| That's why start-high and walk away is a fair opening
| gambit in negotiations of this sort.
|
| You can always come back around, but if they pursue you,
| that tells you something about their appetite.
| whatok wrote:
| I mean, I guess that's something that you can do but it's
| likely to get you laughed out of the room and greatly
| encourage them to reverse engineer whatever you were
| trying to sell.
| fractionalhare wrote:
| This 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 wrote:
| And 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.
| fractionalhare wrote:
| I disagree. Sell-side research using so-called alternative data
| is a different skillset from trading and buy-side research.
| Some datasets comprise sufficient alpha in of themselves to
| trade on, some datasets have some edge (i.e. are not yet priced
| in) but require more sophisticated analysis. Good data is
| necessary but insufficient for developing viable trading
| strategies.
|
| Source: Also used to work in this space. Still do, but not on
| the sell-side anymore. I wouldn't give trading capital to
| someone if their entire pitch was just possession of exclusive,
| useful data.
| Closi wrote:
| Surely a hedge fund has three advantages compared to investing
| yourself:
|
| * Higher amounts of money to invest immediately, so they can
| better capitalise on the data quickly.
|
| * Balance investment risk over many different assets - they can
| take a higher degree of risk/reward as any single failure in
| investment is unlikely to topple them
|
| * Combine multiple data sets with other trading strategies to
| maximise returns.
| dtwest wrote:
| Does 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 wrote:
| It'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 wrote:
| Indeed, 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 wrote:
| Probably should add a "[2017]" to the title of this post.
| paulgb wrote:
| The 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 wrote:
| Definitely agree. I'm not on the level of these hedge funds but
| I do love using data for trading.
| fractionalhare wrote:
| Yep. 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 wrote:
| Absolutely. Ideally, you'd want both, "append only" and a
| vintage of the corrected historical data at every point in
| time. And good metadata.
| scottydelta wrote:
| I recently published a data dashboard(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/) is a data collection and
| analytics platform my company is developing.
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