In recent years, alternative data has been famed in the investment and finance industries. You can’t deny its presence. Companies are using it to speed up their growth as well as to compete in the market. You might be thinking what is alternative data? How is it so important? I am talking about the same in this article.
What is Alternative Data?
Alternative data, as the term suggests, is non-traditional that can provide information on how well a company or asset can perform in the future, such as company filling, broker forecast, and management guidance. This data can be used for pre-trade investment analysis, as well as helping investors monitor the health of a company, industry, or economy.
Many investments already see that alternative data is just as fundamental data for their financial analysis and insights.
Time is money and when trading financial instruments, a fraction of a second is all that stands between profit and catastrophe.
Now you might be curious about how these data help in investment, financial analysis, growing companies, etc. So let’s see how this work.
How alternative data is used?
In order to use alternative data companies uses Artificial Intelligence. Through machine learning, AI uses alternative data to predict various outcomes and patterns that can help investors and companies enormously.
Today investors are using alternative forms of data for new and innovative ways to turn a profit.
Where can we use alternative data?
By now, it must be clear but still let me just list different sector of people who uses it.
- Predictive modeling: A big part of being an analyst is to make educated guesses about how a stock’s price or a company’s financial standing will change. Alternative data help them factor in many different variables that could affect this change, such as the supply of goods/materials, consumer demand, and economic trends.
- Demand forecasting: Analysts use alternative data to anticipate future increases or decreases in consumer demand for certain products or services.
- Investment research and deal sourcing: Analysts from hedge funds, private equity firms, etc, are the ones who manage all the initial investment research which is critical for finding a profitable deal that avoids unnecessary risk. So the more details they have about an investment, and the more accurate those details are, the better their reporting and recommendations will be, and to help with that alternative data comes into the picture.
- Competitive advantage: Now is the time for enterprises to get comfortable with alternative data. As digital technologies and automation reshape how information is managed and used, industries are changing much faster than traditional data analytics can keep up. Alternative data along with artificial intelligence helps to curb this issue.
Different types of Alternative Data
There are many types of alternative data sets. Different platforms are collecting data without you even noticing it, this collection of data helps them to grow faster. Let’s look at different types of alternative data:
- Geo-location: Geo-location data which can be used to measure consumer foot traffic, Offers the ability to survey consumer panelists.
- Social media data: Social media is the treasure house of a lot of interesting alternative data. You can mine social media sites and derive new insights regarding products, brands, and much more. Sentiment analysis based on social media data is no longer a novel idea.
- The Internet: What you see on the website of a particular company is not all that is there on the Internet. There’s much more when it comes to web data that you can explore and exploit.
- Email receipts data: The world has yet to find a better way to communicate electronically than emails. Studying the email receipts of giant corporations like Amazon and Uber, you can derive a lot of insights regarding sales, marketing, and other business aspects.
- Credit card, and debit card data: People have switched over to credit and debit cards for shopping for a long while now. However, there’s a lot of data that is generated every day regarding purchase behavior and trends that you can make use of.
- Satellite data: There’s a growing trend to collect data from satellites or even low-level drones. The data collected in this way would be costly and its quality may vary. While you may get access to a lot of raw data, it may not be exactly useful.
Using Proxycurl as an alternative data provider
Proxycurl is a strong data company with a demonstrable capacity for handling unstructured data. Its core strength in data enrichment capabilities of people and companies - offering insights into people profiles, companies profiles, work & personal email addresses and contact, jobs info, and more sets it apart.
Proxycurl offers APIs that are easy to use, it can drive and power the data-driven applications of hedge funds and investment companies, on top of that they are credit-based for as low as $0.01 per profile enrichment and thus does not tie users up with bulky, heavy subscription or contacts like many other. So Proxycurl is the way to go.
Check out Proxycurl ( https://nubela.co/blog/the-ultimate-guide-to-alternative-data-what-is-it-really ) for more information.
Know more about other products of Proxycurl