What is quantitative investment?

Quantitative investment is a process of choosing potential investments based purely on statistical measurements. These statistics can measure both the value of investment security and the way in the past has been in the market, in an effort to predict future performance. Most quantitative investments are carried out using complex computer models that can spend a lot of information and conclude that investments should be made and which should be prevented. It omits the human psychological element from the investment, but it can also be disadvantageous if the model used does not take into account sudden unexpected events.

Since computer technology has practically changed every aspect of modern life, it also influenced investment. The use of quantitative business methods was the first time a pioneer of securing funds that were historically only available to the richest investors. These strategies have now been filtered on other funds and even an investoire individuali. Quantitative investment is the chosen strategy of those investors who have decided to put their faith exclusively in numbers.

Computer models that can process a large amount of data in a much faster and more comprehensive way than human investors are the core of most quantitative investment strategies. The models receive all the relevant information and then spit a very basic orders to the investor, indicating whether the shares should be purchased or sold. As a result, any intestinal feelings or psychological prejudices that a human investor could bring to the table are eliminated by this process.

Some quantitative investment strategies focus on the value of the securities concerned. Such strategies try to find the inner value of securities in an effort to find out whether the market is overvalued or underestimated. Other investors who use quantitative methods also toNOWN as Quants, watch models designed to indicate price trends. This practice of trend monitoring can recognize whether a certain security is due to an increase in the price based on how it has behaved in the recent past.

There are a limitation of quantitative investment that every investor should explore practice. A specific strategy is only as good as the model on which it is based, so investors should see the results of predictions performed by any quantitative model. In addition, some less developed quantitative models take a long time to respond to significant market changes. Before these slowly reacting models adapt to unforeseen events, the damage caused by the investor may be serious after their council.