• Overview
• Workshop

 

Portfolio Risk Management Based on News Analytics

News analytics is a new upcoming technology, which is efficacious in the field of Financial Risk Management. This technology aims at incorporating real-time financial news coming from various sources into the risk assessment models to make them more reliable. It is important for any company to identify and assess their risks in advance and be prepared for the forthcoming situations, as risk management is important for long term survival. The traditional risk assessment techniques like VaR are based on the historic data and on the assumption of stable market conditions. Such measures give us only the retrospective view of the risk that may not exactly capture the current and future risk.

Semantic News Analysis technique tries to capture the real time news as per its effect on the markets and model these news score into the traditional risk measurement models. As a result, it increases the reliability and consistency of the traditional risk assessment models under stable as well as unstable market conditions.

RavenPack’s news score, based on its proprietary computational linguistics and artificial intelligence technology, quantifies the news pieces and information availed through newswires, websites, blogs,  financial and regional newspapers etc. using sentiment analysis, novelty and relevance in milliseconds. These news sentiment scores, when embedded in the risk assessment models, capture the abnormal market conditions producing better results.

An extensive mathematical research is required to identify the relevant quant factors using news score indices and fit them into the traditional multi-factor risk measurement models. This technique enables the financial risk management models to assess the probability of abnormal market conditions in the future and its impact on the portfolios.

Optirisk in association with RavenPack is a one stop shop for all your News Analytics based quantitative Risk Management software implementations. Integration of our portfolio optimization software with the News Analytics would give the edge over competition.