State of the Art Robust Modeling
There are thousands of ways to estimate the fat tails in any distribution, but remarkably few ways to do it right. Trading Sciences technologies contain some of the world’s leading software for the density and distribution analysis of financial data. Our founders have over forty years of combined experience in the scientific and financial communities. We leverage this extensive expertise to define leading-edge technologies for the robust estimation of fat tails and other non-normal properties of density distributions. Our products are tailored for actionable portfolio management and derivatives trading, are software patentable, and represent state-of-the-art intellectual property.
Trading Sciences density modeling (DM) software represents an attractive alternative to the conventional approaches for measuring risk. While traditional risk measurement systems assume unimodal density distributions, we know that in the real world, distributions are almost always at least bimodal, meaning that most of the estimation methods that assume a unimodal fat tail density will be less accurate. Further, the real world has semi-rare tail events that can actually be mapped and quantified, a form of risk measurement that portrays the reality of how often and how hard one can be punished on a certain instrument. Trading Sciences provides a truly sophisticated picture of the negative sentiment one wishes to defend against in a well crafted risk management system. For a full description of our DM capabilities, click here.
Trading Sciences’ proprietary EM feature warns traders when pricing or volatility dynamics that have generated a pattern of equity returns are no longer intact. EM uses historical information to produce a confidence envelope around an expectation of price, volatility or trading returns and furnishes a warning when the lower confidence limit is violated. EM allows traders to revisit positions when the market state has changed and can ultimately reduce the probability of loss.
TS Derivatives is a true product innovation that reduces the dependencies that determine an option’s price into a single probability estimate. TS Derivatives not only gives you superior option pricing and volatility information, but it easily allows you to instantly gauge which strategies will best suit the current market situation.
For more information on our technology innovations, contact us.