How Hedge Funds Can Use Web Scraping
Web scraping or data extraction is the need of the hour to make sense of the huge and varied data being generated across multiple sources on the web. Irrespective of the sector you are working in, data extraction and mining is a crucial necessity to glean insights into consumer behavior, market forces, competitive intelligence, and price movements, and assist in management decision making.
There’s no denying the fact that numerous brands and enterprises are leveraging data extraction for further development and growth. Of late, hedge fund owners too are showing a huge affinity to utilizing the prowess of web scraping for unlocking new investment opportunities.
What we need to know is how web scraping is helping out hedge fund owners. What is it that makes web scraping essential for them and how can they use the technology to their advantage?
Fund management with web scraping
For a majority of discretionary fund managers, web scraping is a relatively new term. Although data scientists are aware of the concept, they might not have the right skills that lead to effective use of web scraping and data extraction. So, how does hedge fund management take place now? Let’s take a look at the current processes.
Most of the hedge funds have dedicated and centralized teams looking after the data extraction process. They have a group which is continuously looking for crucial data thus extracting it for more information. Once they find what they are looking for, they seek assistance from skilled data scientists who prepare comprehensive reports on the key findings. Based on these reports, managers have to take significant steps and implement crucial business strategies.
It’s here that the major problem arises. Most of these managers aren’t aware of the technicalities involved in data extraction. They don’t know what to do with these reports when it comes to devising business strategies.
The need for effective techniques
What you need is a comprehensive and integrated approach towards the entire process. Data scientists and business managers should have crystal clear understanding of web scraping thus working in tandem for better results. Here’s how they can work together:
1. Portfolio managers: PMs will need to develop a comprehensive understanding of trading strategies along with the power to explain his understandings. He should have the power to identify alpha opportunities.
2. Data scientists: Data scientists should know the art of data mining thus ingesting the findings into a database.
Simultaneous operations should take place where PMs, data scientists, and web scraping experts will take active parts. In a nutshell, business owners need highly efficient quant teams capable of extracting quant data sets.
The steps around web scraping for hedge funds
If you are managing hedge funds, data extraction and web scraping will be essential for you. Before knowing how to use this particular technique, make sure you gain information about the crucial steps that lead to web scraping.
- Gaining access to data sets: Without the right data sets, it is impossible to perform web scraping. Data scientists and PMs must put their best efforts to find the correct information. It can come from internal divisions, external publications, or even from social media.
- Understanding the financial drivers: You should know about the financial drivers involved in the process. Web scraping will depend on these key drivers to a great extent.
- Quant vs. fundamental: There’s always a debate between data quants and fundamental knowledge. The prime emphasis should always be on identifying the insights, working on them, and turning them into effective actions.
With these steps in mind, you can plan the fund management process in detail thus taking the venture towards unsurpassed growth. Hedge fund owners have been relying on fundamental knowledge since a long time; it is high time they made a move and embraced web scraping.
Current positions and prospects
If market reports are anything to go by, you will come across nearly 70 hedge funds who claim to leverage big data. Once you take a closer look, the entire situation will get revealed. Only 20 amongst these 70 hedge funds work with Big Data and rely on web scraping techniques. Market reports also suggest that only a few of them are good at performing the process.
Web scraping is going to be the future! Just after a few years, hedge fund owners will have to rely on web scraping for effective fund management. Therefore, it’s high time to upgrade performances, processes, and operations. Those getting introduced to the concept for the first time should learn the art of performing web scraping and data extraction.
Building strong and effective financial models
Do you feel the existing infrastructure is enough to leverage web scraping? That’s not true, as there are numerous other aspects involved in the process. The presence of a strong and reliable financial model is of paramount significance. Financial models play a highly significant part in the utilization of technologies. If you are thinking of implementing web scraping, check the financial infrastructure and support your venture offers to you.
The third wave
Before the emergence of web scraping and data extraction, hedge fund owners relied on traditional data mining techniques. Those weren’t effective to a great extent, as they failed to offer targeted insights into the extraction process.
It’s here that the need for a third wave came up, and web scraping was what we all waited for. With this new and innovative technology, hedge fund managers will be able to utilize insights to stay ahead of the growth curve!
Hedge fund management involves quite a few significant processes in order to yield the benefits expected by senior management of the company. However, if you are planning to use web scraping, it is important to know the right tips to do so. Most of the data scientists want to bridge the gap between fundamental fund management and web scraping. It is quite obvious that the latter is beneficial in the long run. With these tips and web scraping techniques in mind, you can ensure targeted hedge fund management and handling.