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By Bilal Hafeez 05-02-2020
In: post | Newsletter

Macro Hive Deep Dives: Carbon Risk Premium / Privacy And Big Data Alpha

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(total reading time: 2 mins)

Climate change concerns are intersecting markets in numerous ways not least with a surge of interest in ESG and climate-change friendly investments. Yet, robust analysis around these types of investments is hard to find. Therefore, a new paper on carbon risk and its impact on equity market returns is extremely welcome. I summarise the paper – it’s well worth a read.

Next up, we have Harvard academic and former Microsoft data scientist, Apurv Jain and prediction tech entrepreneur, Neil Seeman, write on the trade-off between privacy and alpha when using big data. I haven’t read much on this topic before, so again a good read.

Enjoy!

Bilal


 

Stock Market Analysis

 

How Carbon Risk Is Impacting Stock Returns (4 min read) Scientific consensus has long been reached on a link between human activities and climate change. But now investors have taken notice, and in that light they are actively reassessing their portfolios. For example, institutional investors have committed to divesting $11 trillion in assets of fossil fuel companies. This begs the question: how is carbon risk priced by markets? Academics from the University of Augsburg and Queen’s University, Ontario, have tackled this question in their recent paper, “Carbon Risk”.

(Bilal Hafeez│3rd February, 2020)

 

 

Privacy vs. Alpha: Is The Trade-off Real? (7 min read) Imagine you are the CEO of a well-known asset management company. You are sitting in a meeting with a new data vendor, your new portfolio manager (PM) who is an expert in alternative data, and your compliance officer.

The Food Data Pitch

The data vendor has data showing exactly what each public company’s CEO and all their workers ordered for lunch every day since 1 January 2011.

 

Data Innovation

He shares a case study where, using the patterns in the food data, their proprietary signal successfully predicted an impending merger of company X that had been shopping for strategic partners, with conglomerate Y. The senior management of public companies X and Y started eating more steaks, fries, and pizza three months before the actual successful merger.

(Apurv JainNeil Seeman│5th February, 2020)

 

 

 

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)