Hedgeweek: Data Science in Focus 2020 – Taking Full Advantage of Data

The growing computing power witnessed in the past few years has led to data becoming more accessible, often at the touch of a button. Though there are huge benefits to this, the progress also means the danger of information overload is an unfortunate reality. As more alternative datasets become available to hedge fund managers looking for a competitive edge, they need to make sure they take full advantage of any data they purchase while also incorporating any information they share across their internal company channels.

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Support for such an endeavour can come from a firm like Causality Link. “Our research assistance tool works as the ultimate brain sitting in the middle of a firm, reading everything on the portfolio managers’ behalf,” says Eric Jensen (pictured), Co-Founder and CTO at Causality Link.

Causality Link’s AI-powered research platform extracts the “causal knowledge” contained within millions of documents and other text-based sources to provide investors and analysts with a unique perspective on companies, industries and macroeconomics.

Pierre Haren, Co-Founder and CEO at Causality Link talks about the challenge professionals face in trying to read everything they should: “The first reason people read is to understand the evolution of the drivers of the data and potentially the future evolution of those drivers. But they also read to build a model in their head that enables them to grasp the consequential impact of different events.”

The platform Causality Link performs both of these tasks for managers. It provides a “wisdom of crowds” point of view of the evolution of almost any driver in the world, but it also gives clients a unique causal model that has been extracted from the knowledge of documents they don’t have the time to read.

A further challenge emerges as a growing number of managers look to use alternative data. With such widespread adoption, there is a risk of these datasets becoming commoditised and therefore losing their differentiating power. The answer to avoiding this fate lies in a firm’s own internal knowledge.

Jensen elaborates: “Our vision is to extend our platform’s capabilities to not only read the news but to enable it to also read internal proprietary research. This way each customer gets access to a bespoke system that superimposes those different layers on each other and tries to identify any incoherencies or inconsistencies which the manager can leverage to their advantage.”

In practice this means the platform will integrate the datapoints drawn up by Causality Link’s analysis, together with any other alternative dataset the manager has purchased, and overlay it with the firms’ internal analyst emails and notes.

Haren adds: “By accessing our services through the Data as a Service (DaaS) system, managers can extract aggregated data from our busy and large data flow which can be instantly merged with any data they have originating from other sources.”

He says the DaaS is one of the three ways Causality Link distributes that data. The other two are through a Software as a Service (SaaS) model or via dashboard technology. “Having three distinct methods of distributing data and knowledge allows us to cater to the full spectrum of different uses,” Haren says. 

The firm has also extended its system to include ESG indicators – a need which was accelerated by the Covid-19 pandemic. Haren observes: “We are responding very quickly to this increased need for integration of ESG concerns within business models and company analyses. What we have to offer is unique because we don’t just report on ESG mentions, we build out the causal links between the ESG story and a business’s actual performance.” 

Pierre Haren, Causality Link

Pierre Haren
Co-founder & CEO, Causality Link

Pierre Haren is a graduate of Ecole Polytechnique in France, and holds MS and PhD degrees from MIT. He led a research team at INRIA on the design of expert systems in the 1980s. He created ILOG in 1987, took it public in 1997 and led its sale to IBM in 2008. He subsequently joined GBS, the consulting arm of IBM where he served for two years as VP of Advanced Analytics and Cognitive. After leaving GBS, Pierre co-founded Causality Link.

Eric Jensen, Causality Link

Eric Jensen
Co-founder & CTO, Causality Link

After earning his master’s degree at the University of Utah’s School of Computing, Eric Jensen joined Truenorthlogic, an educational technology start-up focused on making improvements to public education. As CTO, he led the technical team that hosted and scaled solutions for dozens of large state and district-wide implementations. Capitalising on that success, Eric played a key role in the acquisition of Truenorthlogic by Weld North Equities in 2014. After his Truenorthlogic and Weld North tenure, Eric followed his entrepreneurial spirit and co-founded Causality Link in 2016.