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Alternative Market Briefing

Using cell biology to understand financial markets

Wednesday, May 10, 2017

Bailey McCann, Opalesque New York for New Managers:

In Computational Biology, researchers will sometimes look at gene networks to determine how they cross with each other and what the outcomes are. A lot of that work involves cleaning up noisy data and separating correlation from causation. Professor Desmond Lun has a background in the field and is using his understanding of gene networks to help unlock new insights in financial data. He's the founder and portfolio manager of Taaffeite Capital Management, a boutique quant shop that trades the global equity index and fixed income futures.

Most recently Dr. Lun was in the news for making money off of the Brexit vote by leveraging data from academic studies of blue-green algae to understand how markets might react. His use of this data to trade the market generated a 32 percent return on the day of the vote.

Dr. Lun relies on several algorithms and financial models to figure out where the market is mispriced and go long or short accordingly. In the case of Brexit, Taaffeite's strategy didn't take positions based on the idea that there was a vote being held, but instead just looked for the flaws in other positions that were taken based on the referendum. "Our models look for positions to......................

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