How Stratiphy uses AI

Stratiphy was established to provide technology based investment solutions and services to retail and institutional investors. At Stratiphy we believe technology including AI in all its forms can be used by investment management firms to enhance investor outcomes, including improved investment returns, greater individual personalisation, lower costs and automation of tasks.

Today the category of AI Stratiphy most intensively used is Machine Learning. This is mainly employed to analyse financial data, identify trends and patterns and ultimately to invest in financial instruments.

Machine Learning has been widely used within the finance sector since the late 1950s. One example of intensive use is Algorithmic Trading, such as High-Frequency-Trading (HFT) to simultaneously analyse large volumes of data and make thousands of trades, making faster and more consistent trading decisions than human traders. Machine Learning is also extensively used by quant hedge funds, such as Cliff Asness’ AQR which first invested in broad-based machine learning technology in 2018 using machine-learning algorithms to identify market patterns for its managers to exploit.

Today Stratiphy uses Machine Learning to find a set of optimal parameters for a given investment strategy, using historical data and user-defined constraints. The optimal parameters are then used to determine which financial instruments to invest in. Stratiphy uses a sophisticated proprietary dual-layer approach to continually optimise and learn across a range of parameters, aiming to achieve both high returns and low volatility, combined with a stable risk / return profile over time. This can lead to strategies that perform better than those designed purely by analysts that can adapt more quickly to current market conditions.

As an example, consider a Momentum strategy that is used to exploit a widely recognised market trend, the tendency for stocks that are rising in price to keep rising, and for those declining in price to continue falling. Stratiphy analyses and optimises various parameters used to define a momentum metric in order to achieve optimal performance results.

Optimisation results are based on thousands of Machine Learning trials using multiple parameters and mechanisms to handle correcting data, and for overfitting. Stratiphy uses a dynamic optimisation process to regularly re-run calculations using up to date data reflecting changing market conditions, meaning the optimised parameters take into account the current environment.

We also see huge potential for other types of AI within Stratiphy’s future products and services:

• Generative AI: to provide contextual information to investors explaining why buy and sell activities have been initiated, their drivers and how the trade generation process works. 
• Agentic AI: used to provide an interface to assist investors understanding the elements of an investment strategy and assist in creating the strategy.

When you invest, your capital is at risk. Remember the value of your investments can go down as well as up.