Accurately predicting financial market movements is a major challenge facing the investment industry. The Université de Sherbrooke and Laplace Insights, an emerging investment intelligence firm in Sherbrooke, have partnered to address this challenge by combining the power of artificial intelligence with human intelligence.
Market prices are influenced by thousands of financial and economic factors, including country dynamics, government policies, central bank interventions and the environment, to only name a few. While quantitative models are widely used in investment management today, the use of artificial intelligence (AI) in portfolio management is still in its early stages and looks very promising.
For more than three years, Laplace Insights has been collaborating closely with Professor Shengrui Wang of the Department of Computer Science at the University’s Faculty of Science. An expert in advanced AI research, Professor Wang and his team develop new, high performance AI algorithms that are specifically optimized to predict financial market movements using data from thousands of different data sources. Professor Guy Bellemare of the Department of Finance at the University’s Business School, an expert in finance and investment management, also contributes to the project by selecting the most relevant data streams used to train the new algorithms and evaluate their performance.
“Our research efforts focus on developing algorithms specifically designed to adapt to new and uncertain market situations. Our algorithms help predict structural breaks corresponding to major changes in the markets, and identify the factors associated with these breaks. This is particularly relevant in today’s markets given the major economic upheavals caused by the COVID-19 pandemic, because it provides vital information that helps investment managers make better quality and more informed investment decisions”, says Professor Wang.
“By partnering with the Université de Sherbrooke, we are able to offer an investment intelligence service that is truly at the cutting-edge of AI research. Our goal is to provide our clients, financial advisors and portfolio managers, with the most relevant information and exceptionally high quality predictions on financial market behaviour based on the recommendations of our machine learning algorithms,” says Jean-Marc Patenaude, President of Laplace Insights. The results of this research partnership are already creating a lot of interest in the financial sector. “Our customers and partners in Canada and the United States are pleased with the project outcomes so far, since we can provide them with highly relevant information that helps to better assess the opportunities, risks and uncertainties in financial markets. Our services are particularly appreciated now due do the uncertainty of the COVID-19 pandemic,” adds Mr. Patenaude.
Unparalleled Multidisciplinary Training
Since 2017, 18 students in computer science, mathematics, finance and computer engineering, from both the undergraduate and graduate levels, have contributed to the project as part of the university’s cooperative internship programs or as members of the research staff.
Collaborating with multidisciplinary stakeholders in a leading-edge field is an unparalleled training experience for the students. “This comes close to the real-life professional work environment where operating within multidisciplinary teams is a must-have to innovate. The students also had the opportunity to make a tangible and significant contribution to an emerging business in the field of financial technology, located right here in the Eastern Townships,” says professor Bellemare.