Ai for Alpha: resilient investing, powered by machine learning

Sudden market crashes show the importance of building resilient portfolios. French startup Ai for Alpha has developed a robust tool to help wealth managers to correctly read market signals.

So much data! Even for well-rounded wealth managers, sifting through large amounts of market-generated data and serving reliable financial advice to customers, does not come easy.

Using complex artificial intelligence and machine learning models, French startup Ai for Alpha has developed a robust tool that identifies key variables to be considered on an investment decision, helping asset managers to build better performing portfolios.  

The startup was founded in November 2020, as part of the EIT Digital, Digital Finance portfolio. The founding team brings together reputable investment professionals and distinguished data scientists, capable to immediately sign first-class customers such as investment bank Société Générale, asset manager Homa Capital and wealth manager Meilleur Placement. 

Ai for Alpha has now closed its first round of private funding from a group of French business angels and is focused on scaling its customer base.

Every crisis may serve as an opportunity, and the COVID-19 pandemic has shown how important it is to correctly read market signals and quickly react.

“When the COVID crisis arrived, we realized how difficult it was for asset managers to anticipate these crises. They had access to a multitude of information, but it was exceedingly difficult for them to digest it all and come to rational conclusions, even more so, because some signals were contradictory,” Béatrice Guez, the startup’s CEO, explains.

Ai for Alpha’s machine learning models are trained on 20 years of historical market data. By analyzing more than 150 factors, ranging from market prices to volatility, market sentiment, macroeconomic features technical analysis, evolution of rates, and others, the software estimates the probability of the markets moving towards a bull or bear regime.

“This approach is very efficient, because our model constantly learns from experience and improves its understanding of the connections between economic factors and their impact on the markets,” Guez says.

The crash probability assessment, and an explanation of the marginal contribution of each factor to it, is provided daily to paying customers, either by email or through a web platform.

In the future, Ai for Alpha plans to offer AI-based wealth management advice aimed at socially responsible investments. “We’ll use machine learning to help managers identify eligible funds that take into account environmental, social and governance factors,” the CEO says.

The company is further proof of how EIT Digital-supported innovation can have a positive impact on the economy while also making the world a better place.