The Emergence of Alt-Data and its Applications
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The document discusses the growing interest in alternative data, or 'alt-data', which provides insights beyond traditional data sources. Key types of alt-data include social media, satellite data, credit card transactions, and weather data, all of which can inform critical decisions in various fields such as finance, agriculture, healthcare, and military. As demand for unique insights rises, the integration of these alternative data sources is reshaping research and decision-making practices across industries.
The Emergence of Alt-Data and its Applications
- 2. “People have long sought “local knowledge,” “the inside scoop” or “a heads up” – the restaurant not in the guidebook, the real version of the story, or some advanced warning. What they really want is an advantage over common knowledge – and the unique information source that delivers it. They’re looking for alternative data – or “alt- data.” - Jennifer Belissent
- 3. Analysis of alternative data can provide insights beyond that which an industry’s regular data sources are capable of providing.
- 5. • Social Media Data • Satellite Data • Credit Card Transaction Data • Weather Data • IoT devices Some sources of alt-data:
- 6. Social media sites are now the fastest medium for breaking news. Early signs of upcoming market trends can be spotted by monitoring the right handles on the right social media platforms. Information found on social networks can provide unique and valuable insight into real-time news events breaking around the world.
- 7. Satellite data can help financial professionals better forecast critical investment inputs such as crop yields, factory output, and global oil supply. If you can predict the volume of customers, health of a particular crop, or portions of the global oil supply, you can then infer overall business performance and future stock price shifts.
- 8. Credit card transaction data can be strategically used to estimate sales at retail stores, gas stations, and other businesses, as well as look up the ecosystem to predict the impact on vendors and suppliers. Higher transaction volume means more revenue for retailers, card issuers, and processors, while lower transactions correlate to lower revenue.
- 9. Accurately predicting how weather events impact businesses gives investment professionals an edge. If analysts can go beyond severe weather and predict how even minor weather events affect businesses, they can create detailed trading models that predict everything from retail sales volumes to solar and wind energy outputs.
- 10. Applications of Alt data
- 11. • Cryptocurrency trading • Research • Precision agriculture • Healthcare • Military
- 12. A primary consideration for cryptocurrency traders is finding the best real-time information to help guide trading decisions in a highly volatile, global and always-open market. This can be tackled by turning towards alternative data sources such as social media.
- 13. The demand for alternative data is rising as research is digitized and integrated into decision making. Moreover, the erosion of existing patterns of research will accelerate as more asset managers begin to use alternative data.
- 14. Farmers can analyze time-series images taken by satellites and drones to make more accurate predictions about crop yields and plan accordingly.
- 15. Public healthcare workers can mine social media for specific keywords to fine-tune initiatives that track the spread of various contagious diseases.
- 16. Autonomous robots can be used as additional eyes and ears to help improve situational awareness in the military. Different sources of alternative data can together help strengthen the operations.
- 17. We are now entering an age where everyone seeks alternatives: new sources of information and innovative ways of deriving unique insights. This is the “Age of Alt.”