Big data presents opportunities for hedge funds

The use of unstructured data in creating an alternative information edge is a potential new source of uncorrelated excess returns


The efficient market hypothesis in its semi-strong form posits that asset prices reflect all publicly available information (Fama, 1970). Therefore, to achieve outperforming trading profits, one would need to obtain information unavailable to the public. Recently, there has been growing evidence of such information flows through social connections, education networks (Cohen, Frazzini and Malloy, 2008, 2010), geographical proximity (Coval and Moskowitz, 2001), expert networks, as well as through

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