Picture this: you are working on the long-term strategy of a global telecommunications company and you want to explore the potential impact on your company of satellite internet actors such as Starlink or Project Kuiper from Amazon. However, a quick Google search on this topic yields thousands of articles, videos, scientific journal publications – even sponsored content. How can you possibly digest the incredible volume of information the search engine has provided on this niche topic, sifting through it all to draw your own unique conclusions? How do you understand the dynamics of this market and track its evolution and potential impact on your company in real time?
In today’s digital world, we are in a constant state of information overload. Researchers are no longer required to dig for information in books, journals and other physical reference materials; instead, the web provides us with seemingly endless information on any topic imaginable. Ironically, the scarcest resource for researchers is no longer information, but time – the ability to derive meaningful insights from boundless quantities of text and timeliness – the ability to access first the most meaningful information for their purpose.
Within the dynamic landscape of the financial markets, this need for efficiency is particularly important, as the early detection of emerging trends can enable participants to anticipate market fluctuations before they happen and adapt their strategies accordingly. Conversely, if a portfolio manager decides without knowing the full story or overreacts to an insignificant piece of news, there could be millions at stake. This is the risk that comes with the deluge of information market players are exposed to each day.
Market participants could guard against these outcomes if they had a system alerting them to novel trends and events relevant to their specific portfolios. In our recent whitepaper – Beyond the Noise: The Power of Pertinent Market Alerts – we unpack how Causality Link has built exactly that. Powered by natural language processing (NLP) technology, our alert system is designed to process, analyze and extract critical pieces of predictive information from vast quantities of text, enabling market participants to proactively respond to shifting dynamics and hone their competitive edge.
The Causality Link platform is a sophisticated research environment that uses advanced algorithms to ingest news articles and financial reports and demonstrate how they reflect or predict market dynamics. The concept of topic acceleration is of particular importance to us – by identifying topics and causal relationships that are gaining momentum rapidly, we can pinpoint potential shifts in market sentiment or focus. Having this level of relevant intelligence can be the difference between capitalizing on a major opportunity and being unable to close out a newly unfavorable position.
One of the ways we measure topic acceleration is through what we call a novelty score, which dynamically ranks emerging discussions regarding companies, sectors and economies using specific events, key performance indicators (KPIs) or causal relationships. By evaluating the latest discourse against a backdrop of historical data, users can get a true understanding of whether there’s been a shift in consensus sentiment. For example, a high novelty score can highlight a new causal relationship between a new event (such as the Daihatsu scandal) and the financial results of a specific company (such as Toyota). What’s more, users can look back in time and assess novelty scores on a historical basis, enabling retrospective analysis of the accuracy and effectiveness of decisions and the tool’s predictive capability.
Novelty scores are just one example of how our platform can enable market participants to create new insights, gain a predictive edge and ultimately improve their investment outcomes. Our new whitepaper explores this concept further, including via a graphical justification of novelty scoring.
Interested in taking the next step with Causality Link? We invite you to reach out for a free evaluation or a deeper dive into our platform. Contact us at info@causalitylink.com to schedule a free demo.
