In anticipation of his upcoming conference presentation, Déjà Vu in the Stock Market – When Contexts Match, Opportunities Repeat at Predictive Analytics World for Financial in Las Vegas, June 3-7, 2018, we asked Kevin Pratt, Chief Scientist at ZZAlpha Ltd., a few questions about his work in predictive analytics.
Q: In your work with predictive analytics, what behavior or outcome do your models predict?
A: We rank stocks daily using the predicted percent price rise over the next month. That allows users to invest each morning using the best choices (among big, liquid stocks) across the entire market.
Q: How does predictive analytics deliver value at your organization – what is one specific way in which it actively drives decisions or operations?
A: Our users expect compounded results of investments (using our specific recommendations) to beat the market (as measured by a pre-determined benchmark). We make specific recommendations for immediate investment with a specific time-to-sell horizon. This allows us to measure, manage, and apply machine learning effectively.
Q: Can you describe a quantitative result, such as the predictive lift of your model or the ROI of an analytics initiative?
A: In 2017, we saw 33% net gains in actual million dollar portfolios of large recommended stocks compared to a benchmark of 20% for the S&P500. Because these gains reflect 500 individual daily stock selections through the year based on our top recommendations, they are statistically sound results, not a mere small-sample anomaly.
Q: What surprising discovery or insight have you unearthed in your data?
A: The famous “bell curve” rings with mediocrity. We throw away 83% out of the middle and learn from the rest.
Q: Sneak preview: Please tell us a take-away that you will provide during your talk at Predictive Analytics World.
A: The stock market is like a huge carnival of leaders, laggards and liars who constantly switch costumes. The big data network linkages of all the player’s actions are what briefly unmask the true identities.
Don’t miss Kevin’s conference presentation, Déjà Vu in the Stock Market – When Contexts Match, Opportunities Repeat on Tuesday, June 5, 2018 from 11:45 am to 12:05 pm at Predictive Analytics World for Financial in Las Vegas. Click here to register to attend. Use Code PATIMES for 15% off current prices (excludes workshops).
By: Eric Siegel, Founder, Predictive Analytics World
Eric Siegel is the founder of Predictive Analytics World (www.pawcon.com) — the premier machine learning conference, with cross-vendor industry events in Las Vegas, Washington DC, London, Munich, and Berlin — and the author of the award-winning book, Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die – Revised and Updated Edition, (Wiley, 2016).