How Hedge Funds Are Using Web Scraping To Make Millions

Investment companies are spending a large amount of money on web scraping every year. Millions of dollars are being used to gather, analyse and use big data to stay ahead in the game.

By Anmol @March, 10 2021

how hedge funds are using web scraping to make millions

“Good decisions come from experience. Experience comes from making bad decisions.” 

- Mark Twain

 

Imagine if gaining or losing millions of dollars rests upon just a single decision of yours. 

Sounds stressful? 

Now imagine making at least 6 of them before your morning coffee.

And then a few more before breakfast. 

Well, that’s the life of a hedge fund investor. 

With the finance market getting more cutthroat by the day, mistakes can be deadly. 

No wonder hedge fund investors are turning towards web scraping and big data analytics to keep them ahead in the game. They have started to rely more on data-driven strategies to ensure a win every time they invest. 

The last few years have seen a monumental increase in the use of alternate data in investment decision making in hedge funds, investment banks and even private equity firms. Collecting and analysing alternate data has given these firms a huge competitive edge in the market. 

Why are hedge funds using web scraping?

The internet today is generating an enormous amount of data. Tapping into that data can provide hedge funds with valuable insights that can help them make smarter decisions. 

However, filtering through such a huge amount of data and acquiring only what’s relevant to you

is no child’s play. That’s where web scraping comes into play. Web scraping efficiently extracts data from a wide range of sources and streamlines this data to help guide investment decisions.  

Each day, the number of investment firms depending on web scraping is increasing. They are using web data integration, a more robust form of web scraping that makes the data easy to consume in form of reports, visuals and dashboards. 

Finance market’s unique data requirements

Data completeness and data quality are the two major aspects on which an investment firm judges the data. 

Data completeness

When stakes are a multi-billion dollar high, benchmarking and testing your hypothesis becomes very important. This means that the scraped data has no value until the data set is complete. Unless the data is complete, the firms can’t validate their hypothesis. 

For any investment firm, data completeness is very important. 

There are 2 ways to achieve a complete data set. 

  • The firm can purchase historical data sets.

  • OR they can acquire it themselves by web scraping. 

Acquiring the data by themselves gives a huge advantage to the firm as they can now have access to the data their competitors won’t. 

Data Quality

Without high-quality data, investment decision making becomes too unreliable and too risky. This poses a huge challenge to any hedge fund relying on data-driven strategies as they might be very easily blindsided by the slightest change in the market trends.  

The reason for this heightened need for data quality is that any breaks or corruptions in the data set risks corrupting the whole data set. Making it unusable for decision making as the chances of misguided investment become very high. 

Unless you are very confident in the accuracy of the data, any lapses in the data set can cause severe disruption. 

If you are a hedge fund acquiring data, make sure that the web scrapers you use are robust and can provide for all your data needs. 

Web scraping and decision making

When it comes to the finance market, there is no bigger advantage in knowing something that the rest of the market doesn’t know. 

And investment firms are willing to gain and hold on to that advantage at any cost. In fact, Investment companies are spending a large amount of money on web scraping every year. Millions of dollars are being used to gather, analyse and use big data to stay ahead in the game. 

There are many types of data that financial firms are on the lookout for. Such as product pricing, search trends, insights from expert networks and web traffic data. 

They are not only monitoring the latest trends but also keeping a close eye on social media for sentiment analysis since more and more brands are taking to these social platforms to announce new developments.  

In fact, Twitter even partnered with Bloomberg in 2017 to deliver a real-time feed of curated Twitter data to clients who could then integrate it into their trading algorithm. 

A survey from November 2017 by EY found that more than a quarter of hedge funds were planning to use social media data in their investment strategies. By constantly scraping popular and easily available websites like Twitter and Amazon, hedge funds are always finding new and unique data sources. This helps them make even more accurate predictions about the changing market trends and their data-driven strategies help them stay ahead of the competition. 

If you are an investor, it’s time for you to turn your attention toward the many benefits of web scraping for the investment market. Our predefined extractors are a good place to start. Here is a list of predefined investment web scrapers that will get you just the data you need. 

Coin Market Cap Crypto Web Scraper

Reddit WallStreetBets Subreddit Web Scraper 

Cafefvn Web Scraper 

Yahoo Finance Cryptocurrency Web Scraper 

Moneysupermarket Interest Web Scraper

Savingschampion Web Scraper

Anbima Data Investment Funds & Debentures Web Scraper

For any queries or thoughts, feel free to reach us at info@webautomation.io

 

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