HSBC has built an automated, AI-based algorithm (in partnership with EquBot and IBM Watson) to read millions of data points about 1,000 of the largest publicly traded US companies. Data fed to the algorithm includes everything from press releases and tweets to satellite images of parking lots and the tone and language used during earnings calls.
Based on these inputs, HSBC’s AI algorithm automatically selects companies that it expects will see a rising stock price in coming months. These companies are organized into a fund—AiPEX—that is rebalanced at the end of each month. The algorithm also accounts for market volatility by modifying the balance of stocks and cash in the AiPEX fund on a daily basis.
The key to HSBC’s AI trading is that it uses much of the same data that market analysts currently examine when deciding whether to invest in a company. But, the algorithm is able to take in and correlate an unlimited number of data points in a matter of hours—something no human analyst could ever be capable of doing.
As Dave Odenath, Head of Quantitative Investment Solutions, Americas at HSBC Global Banking and Markets, put it, “AiPEX simulates a team of thousands of analysts and traders working around the clock to learn from millions of pieces of information and identify potential investment opportunities.”
HSBC is currently offering AiPEX to clients around the globe, enabling both institutional and public investors to invest in the AI-based fund.