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alternative-data-in-finance

Exploring Alternative Data in Finance

Chain of Demand

Using alternative data to gain an edge in business decisions plays a tremendous role in staying ahead. Alternative data is any non-conventional set of data that helps with better decision-making.  Collecting and using this data is crucial to remain competitively advantageous in this landscape, especially in the finance sector. More mutual fund directors and hedge fund managers are discovering and diving into this space with greater opportunities. Alternative data for finance can come from many different sources, from monetary exchanges, sensors, cell phones, satellites, and the Internet.

 

Using Alternative Data for Better Investment Decisions

In the last few years, there has been a list of alternative data providers that provide the right datasets and information to help financial services and analysts. The assortment of digital data is used to understand a company better, accounting for different angles. For anyone working in the finance industry, the following points are benefits to using alternative data in your strategy. 

 

  • Differentiation — In the age of digitization, the finance sector is strongly regulated and in a constant struggle to stick to the changing demands. With alternative data, you will have a more clear-cut advantage in strategy with a more data-centered approach. Of conventional monetary information, subsequently giving a more all-encompassing and complete outline of any targeted business. 

  • Innovate for Alpha — Most managers have seen a direct profit using alternative data to improve their alpha-creating ability. When gathered from non-conventional sources, alternative data can reveal opportunities in investment.
  • Risk Management — There is a high vulnerability when it comes to financial investments. Using alternative data from a few sources in various organizations, monetary firms need to embrace more strong information, approval and cleaning measures when they present new informational collections. Some informational indexes, particularly arising ones, can be restricted in what they cover. Others may contain data that is not tradable but rather could be valuable as speculation or exchanging benchmark. Since information’s helpfulness and restrictions aren’t generally clear from the start, be set up to burrow to precisely comprehend what each set contains.

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Alternative Data Sources for Predictive Insights

There are plenty of alt data sources that can be used to create alpha—some of the ones mentioned below help provide predictive insights into your decisions.

  • App Usage — The way people use their apps and how long they spend on such apps can be huge for alternative data. This additional layer of data can help investors understand consumer behavior and serve as insight into how a customer may use a given program, providing information into the mental patterns of an app’s users.
  • Geo-location — This includes satellite information that can also be found online. Location data can be quite useful, providing insight into retailers, lodgings, travel, and transportation. This sort of information can be quite useful for retail investors in the finance space.

  • Credit Card Receipts — Visa transaction data and retail location provide financial services information on a company’s traffic and dealings. Credit card transaction data can serve as a valuable reference for managers in the finance sector. Using this type of alternative data source can provide insight into how well a retail store is doing. 

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Trusted Alternative Data Provider

Alternative data has proved to be an immense significant advantage. However, despite its advantages, there are many challenges to finding the right provider, as this is a relatively new area in all sectors. Even if there is plenty of data out in the world to use, knowing how to simplify and make use of that data is essential, which is why hedge fund managers and financial services need to consider the right data-informed company. Chain of Demand does exactly that, helping companies and investors make smarter business decisions by making data easy. With access to millions of data points to gain alpha, we blend retail and data science expertise to provide customized data exactly the way you need it.

 

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