Uncover Business Opportunities in Commodity Trading
Combining alternative data with conventional data for the purpose of asset valuation and risk calculation.
The shifts in economic, ecological and regulatory systems are marking the global economy as whole. These trends are having numerous effects on Commodity Trading and Commodity Producing companies who need to continuously monitor their inherent risks and rapidly assess and react to market opportunities.
Asset valuation and risk calculations are of high importance in commodity trading and involve complex features in structured financial contracts (i.e. cross commodity spreads, seasonal spreads, volumetric uncertainty due demand volatility and inherit characteristics of physical assets) but also underlying non-market dynamics (i.e. seasonality patterns, mean reversion, prices spikes/jumps, often correlated with geopolitical news, weather anomalies etc.).
Alternative Data Applications
Due to the greater complexity of asset valuation and risk calculation a hybrid methodology need to be considered involving stochastic modelling, optimization methods and machine learning application with conventional and alternative data.
Alternative data refers to external information such as weather, news, social media, sensor data and satellite images and is of primary importance for broadening the spectrum of commodity-related analytics when compared to using conventional (stochastic) models (i.e. calibrating a price forecaster to just historic prices of the underlying commodity).
Understand how weather forecasts may have an impact on energy productions and what is the effect on price formation.
Understand how transportation disruptions extracted from traffic data may impact commodity supply due to reduced shipping availability.
Understand how satellite data can be explored to assess agricultural productions based on the color of crops.
Understand how social media can be used to extract opinions from blogs or writings of trading commentators that might lead to identify a trend or an opportunity for new trading strategy.
Data on Purpose Workshop
Our Data on Purpose Workshop helps companies to identify the relevant approach and alternative data required for meeting individual needs and increasing compatibility with existing in-house data sources towards new trading strategies.