Role of AI in Finance and Risk Management

  • Time Series modelling and forecasting are at the core of quantitative analysis for most investors looking at Artificial Intelligence.
  • Predicting markets however is challenging, perhaps impossible. Further, predicting markets even with a > 50% accuracy is not sufficient in real-life investing.
  • Risk management, portfolio allocation, setting a stop loss, choosing underlying assets all contribute at least equally, but often dominate, the ‘prediction’ aspect of investment management.
  • Setting on an investment strategy is always a decision on risk adjusted return.

Forecasting is not enough!

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