Implementable Quantitative Research

Abstract

The easy accessibility of high-speed computing power and the dominant role of institutional trading in recent years have resulted in the inevitable trend of implementing quantitative research and investment strategies. The gradual move of replacing traditional human judgments with machine calculations is based on the assumption that computers outperform most humans. Since a quantitative process is capable of systematically handling a large amount of information quickly and consistently, ambiguity and unpredictability which are often associated with subjective choices during decision making can be kept to a minimum. For fact or fancy, most modern portfolio managers include some form of quantitative approach in their overall investment process. This article explains the process of performing quantitative research and converting that research into implementable trading strategies. It seeks to reconcile the best of both worlds and identify concerns in the process of investment research and management.