FREQUENTLY ASKED QUESTIONS
AlgoDynamix provides financial risk forecasting solutions giving investment banks and asset managers hours or days advance warning of major directional market movements.
Existing clients include investment banks and asset managers including CTAs, hedge funds, family offices and other managed funds.
Unlike other solutions, the underlying risk analytics technology does not require any historical data or knowledge of any previous disruptive events.
Existing financial risk models are designed and calibrated based on previous data points and events. This approach, sometimes even combined with traditional machine learning, works very well for ‘business as usual’ risk applications. In additional these existing models are not always good at forecasting and even less so for providing any indication market direction.
The very novel approach at AlgoDynamix has no reliance or assumptions about past events, no training data set and provides clear insights about direction and scale of panic.
Our clear unique insights about direction and scale of panic, come from understanding the actual behaviour of market participants by observing them at the exchanges order books.
This approach does not rely on any models, assumptions, news, sentiment or indeed any other ‘secondary’ source of data.
The core technology is based on an agent based unsupervised machine learning algorithms (‘AI’) that analyses the dynamic behaviour of market participants (‘buyers and sellers’). These participants are grouped together – based on common feature sets – resulting in distinct user ‘clusters’.
Cluster identification amongst noisy market participants is part of our unique core capabilities. Major movements in financial markets occur when major clusters of market participants all start behaving in the same way.
The input data to all our products is directly obtained from the world’s global financial exchanges. To date we have direct connectivity to the limit order books of most G20 exchanges; the entire order books of these exchanges are clustered as described above.
This advanced ‘AI’ technology was developed based on many years of research at the University of Cambridge, where the founders met.
This unique technology has clear benefits for most asset managers and investment banks (front office: trading, portfolio and risk managers).
The company has tier 1 and tier 2 investment banking clients using these analytics in live production environments. In addition to direct sales, AlgoDynamix is also setting up channel partnership agreements and partnering with asset managers to create fully AlgoDynamix enabled investment products including global de-risked equity indices and special types of ‘smart beta’ factor model portfolios.
The end result is substantially better risk adjusted returns across most of the relevant business units.