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Hedge funds use satellite images to beat Wall Street

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Re: Hedge funds use satellite images to beat Wall Street

#31

Post by floatrock »

waterside81 wrote: post #14

There's a whole marketplace where companies with so-called "Alternative-data" sell their datasets to quant traders. Satellite imagery of farms, passenger traffic through airports, all sorts of random, seemingly disparate data.

The reason your free weather app asks for your location data isn't for "local weather forecasts". Well, it is, but that's a cost for them. The income comes from keeping that location tracking on all the time and selling which stores and dentists you go to. Someone can link the NYT story from a few months ago when this came to mainstream attention.

Hedge funds also fly cesnas over refinery fields to look at the levels of those big tanks you see off the highway... most of them have roofs that move up or down with capacity, and those that don't you look at with an infrared camera to look at relative temperature differences.

Re: Hedge funds use satellite images to beat Wall Street

#33

Post by [deleted] »

harryh wrote: post #12

This article is very wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos. Remember the Matt Levine test: insider trading is about theft, not fairness. When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit…

[deleted]

Re: Hedge funds use satellite images to beat Wall Street

#34

Post by bluGill »

mc32 wrote: post #19
rococode wrote: post #6

I went to a recruiting talk by Two Sigma a while back where they discussed the same thing as an example of "look at this cool stuff we get to work on". They had slides with satellite images of some parking lot and showed how they could segment cars, deal with car-like things on roofs, map regions of parking lots to the right stores, handle different conditions like snow, etc. From a technical perspective it's actuall…

How do they deal with underground parking in urban areas especially?

They don't need to. People who park underground, walk or use public transit are close enough to people who park above ground that they get enough data without that. In most cases just one WalMart is enough to infer everything you need to know about them all - if you select the right one for your question. (you wouldn't select just one because then you need to ask if there is something specific about that one, but a statistical sample is enough).

Unless your thesis is people who park underground shop differently. That is a valid idea and you cannot answer it via this study. However you can study it by other means if you believe this is important.

Re: Hedge funds use satellite images to beat Wall Street

#35

Post by floatrock »

mc32 wrote: post #19
rococode wrote: post #6

I went to a recruiting talk by Two Sigma a while back where they discussed the same thing as an example of "look at this cool stuff we get to work on". They had slides with satellite images of some parking lot and showed how they could segment cars, deal with car-like things on roofs, map regions of parking lots to the right stores, handle different conditions like snow, etc. From a technical perspective it's actuall…

How do they deal with underground parking in urban areas especially?

buy the feed from the nest camera across the street from the entrance

Re: Hedge funds use satellite images to beat Wall Street

#36

Post by short_sells_poo »

waterside81 wrote: post #14

There's a whole marketplace where companies with so-called "Alternative-data" sell their datasets to quant traders. Satellite imagery of farms, passenger traffic through airports, all sorts of random, seemingly disparate data.

Alternative data and analytics providers tend to fall into two categories:

1. They are just trying to ride the ML hype train and they sell effectively polished turds to board member buddies. This is the vast majority of the alt data and analytics firms. They have flashy dashboards and allow you to drag&drop together models and data. The whole thing looks very fancy during the sales pitch. It's all animated and shows charts that impress CEOs. Then when your quants get hold of the data they discover that it's real world predictive power is zero.

2. They actually discover valuable data or build models that genuinely produce an edge on the market. These either turn into hedge funds or are bought by an existing hedge fund to run the model in house. You rarely hear of these because their offering is public only briefly or not at all.

Re: Hedge funds use satellite images to beat Wall Street

#37

Post by jandrewrogers »

The same thing has been done with mobile data for many years, with higher fidelity. Unlike with satellite imagery, the measurement is almost continuous, you can accurately characterize which subpopulations are changing behavior, and you can sometimes characterize the change in behavior e.g. shopping more/less, spending more time at different retailers/competitors, etc.

Remote sensing like satellite is excellent for other similar types financial modeling applications, but I wouldn't use it for modeling retail as it is much too coarse.

Re: Hedge funds use satellite images to beat Wall Street

#38

Post by mgfist »

mc32 wrote: post #19
rococode wrote: post #6

I went to a recruiting talk by Two Sigma a while back where they discussed the same thing as an example of "look at this cool stuff we get to work on". They had slides with satellite images of some parking lot and showed how they could segment cars, deal with car-like things on roofs, map regions of parking lots to the right stores, handle different conditions like snow, etc. From a technical perspective it's actuall…

How do they deal with underground parking in urban areas especially?

You can count cars going in and out.

Re: Hedge funds use satellite images to beat Wall Street

#39

Post by xigency »

lolc wrote: post #15

I find it somewhat interesting to what lengths traders go for profits. Cue people who explain how this makes the markets more efficient. Something I'm wondering about though: The article makes it sound like this is some new unfair advantage of the big traders. But isn't this an old game? If you can afford to acquire and process the data you're likely going to beat the other participants. That was always true. I don't…

> I find it somewhat interesting to what lengths traders go for profits.

That's not too surprising. Isn't that the entire motivation?

Re: Hedge funds use satellite images to beat Wall Street

#40

Post by mochomocha »

harryh wrote: post #12

This article is very wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos. Remember the Matt Levine test: insider trading is about theft, not fairness. When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit…

> When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit.

I must be dumb, but I don't understand this statement... How is that a "theft"? You knowing that I eat 2 eggs in the morning when I don't want people to know is not you "stealing" information from me.

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