The Ultimate Guide to Alternative Data - What Is It Really?

"Where there is data smoke, there is business fire." - Thomas Redman

Investment firms and hedge funds have sensed the smoke, now they wisely harness the fire. Data for gaining insights into investment processes no longer rely solely on information published by companies (through cash flows, financial statements, press releases, and other macro data like GDP and inflation). The focus has now shifted to the most unlikely of places. Welcome to the world of Alternative data.

What is Alternative Data?

Alternative data is data sourced from outside the company (alternatively through financial transactions, sensors, mobile devices, public records, the internet, etc). This data gathered provides unique insights into investment opportunities and offers an advantage for those seeking to outperform others in the market. This data includes; Social Media data, Web browsing data, Mobile App data, Email receipts, Location data, People and company data, Credit card data and the list goes on and on.

Who uses alternative data?

Alternative data is mostly by used hedge funds and investment firms to aid decision-making to predict economic outlooks. Now there's little or no need for the "gut feeling" for professional investors who would rather make decisions based on actual data. According to Rob Matheson on MIT News, hedging funds could predict REIT values and the economy using location data pulled from mobile devices. Investing analysts, quant traders, and fund managers also use alternative data to guide their algorithms, generating consistently better returns than the broad market.

How do you access alternative data?

Alternative data vendors such as Proxycurl offer alternative data of several types to suit different business purposes.

Proxycurl - People and Company Alternative Data

Proxycurl's data handling capabilities are impressive, and unstructured data is no exception. The company specializes in enriching the data of people and companies - offering insights into people profiles, company profiles, work, and personal email addresses, jobs, and more.

APIs offered by Proxycurl can drive and power data-driven applications for hedge funds and investment firms. In addition to being extremely user-friendly, these APIs are also very cost-effective. Users are not tied to bulky, heavy subscriptions or contracts with their services since they are credit-based for as little as $0.01 per profile enrichment.

To learn more, please check out the official blog about Alternative Data