Whitepaper – AI in investing and developments in NLP
Kristoffer Nordström and our CIO Thorbjörn Wallentin has written a whitepaper where they give a brief introduction on how AI can be used in investing by constructing a tradable sentiment index based on Swedish press releases. They also give an overview of recent developments in Natural Language Processing.
Interestingly their simplistic approach performs on par with the underlying index in terms of total return. Since the total time in market is lower for the strategy, it reduces the overall market risk, while keeping approximately the same upside. Also, the strategy successfully managed to stay out of the market during the drawdown in March 2020 and later put on exposure when the sentiment increased again.