AIH Fintech’s Ahmed Imtiaz Habib writes that after the recent market correction, the burning question going through the minds of advisers and their clients was the average recovery period for the past 5 per cent, 10 per cent or even 15 per cent market corrections.
Market correction from time to time is a natural phenomenon. However, given the presence of several potentially destabilising factors such as the US debt ceiling crisis, spreading Chinese debt crisis, possibility of economic slowdown, inflationary pressures due to supply chain disruption and labour shortage, there was a dilemma among investors regarding market trajectory going forward as further market decline was a real possibility. Previously, buying the dip tendency gave rise to the question regarding the velocity of market recovery in the following sessions after a 1 per cent or more decline.
In order to answer such questions in a timely and cost-effective way, AIH Fintech recently launched its big data investment research platform. The platform covers many traditional as well as non-traditional performance and risk metrics to provide a holistic view on market price movements. Investors can instantly perform investment research (in terms of risk, ROI & price movements) on various securities, representing various asset-classes/sectors/themes (for one day to past 10 years). Investors can also search by and get a snapshot of much talked about topics these days such as inflation, COVID, etc from the price movement analytics. However, the platform covers select US listed securities only at this point in time with a plan for further expansion in future.
Our aim was to offer the answers to the toughest burning questions instantly to the entire investment community in a cost-effective manner. Oftentimes, during market sell-offs, panicking clients overwhelm their advisors with similar types of questions while in the other times, many investors miss out on potential buying opportunities. Typical technical analysis or charts doesn’t necessarily give a clear picture in such situations the way our solution does.
We also use a proprietary ranking algorithm for Ranking (based on Risk & ROI) which greatly simplifies performance ranking for investors. The algorithm takes into account various risk metrics for the user selected time period to determine the ranking.
Previously, AIH Fintech launched an artificial intelligence driven market research and proactive risk analytics solution. The A.I. resolves ‘information overload due to big data’ by analyzing various market related factors simultaneously and produces a leading index and two additional charts to elaborate on the leading Index for presenting a snapshot of likely market condition over a specific time period in order to assist investors in achieving diversification across time-frames and asset-classes. The A.I. focuses on macro, micro/fundamental and trend analysis.
Reactive risk analytics not only respond after market movements but also miss out on potential buying opportunities. On the other hand, proactive risk analytics anticipate risk with the aim of risk avoidance and focus on potential buying opportunities.The resulting all-weather risk parity strategies handily outperformed S&P500 using traditional asset classes and low cost ETFs for asset under research in recent years. Given the market neutrality and demand for risk parity funds, such themes are relevant under all market conditions.
However, this service is available to hedge funds or asset managers and can be used for risk analytics and asset allocation purposes or potential ETF implementation.