Can we use machine learning to understand stock movements?

Alex Burke,  Senior writer,  No More Practice Education

When designing a diversified portfolio, it sometimes helps not to look at individual holdings in isolation.

 

 

While Orbis Investments uses fundamental, bottom-up research to select its stocks, there's another overlay the investment manager uses that help it to determine how said stocks are behaving in relation to one another.

If you read this, you will learn:

  • how using quantitative analysis and machine learning, Orbis can visualise relationships between different stocks
    • how the 'clustering' of different stocks can reflect their relative price movements
          • why using this approach can help determine that a portfolio is sufficiently diversified by virtue of not taking 'one big bet', but rather a series of smaller ones

         

       

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