Quick and powerful insight

Our Quant ratings provide a quick and powerful insight on stocks by addressing 5 factors that have historically been highly correlated to stock returns:

1) Growth, 2) Valuation, 3) Efficiency, 4) Revisions and 5) Momentum.

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For each factor, we compare a variety of quantitative metrics for each company with the rest of its sector to determine a score from A (best in sector) to D (worst in sector). Our overall Quant Rating considers the aggregation of the 5 factors.

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Machine learning

Machine learning is in the DNA of QDD Research and has been since our launch in 2017. The metrics we consider in our ratings and their relative importance are different from one sector to another, based on their historical relation to stock returns in that sector. As these relations change over time, our scoring algorithm adapts to focus on the most meaningful indicators. Every month, our scoring algorithm is refined by expanding its dataset. Machine learning enables us to adapt to a changing world where investment styles and criteria change over time.

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In backtesting the performance of the strategy, our algorithm considers the financial dataset and knowledge available every month since January 2008 to calculate  quant ratings for every stock in the same fashion it does in the real world today. By constantly optimizing our scoring algorithm based on data available at the date of the decision, our machine learning process reduces the risk of bias and improves the probabilities of continued alpha generation over time.

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Our Quant Picks

Our Quant Picks highlight about 30 stocks with quant ratings of A+, from every sector. Sector weightings always closely match the index, making sure we generate alpha purely from stock selection, not from sector allocation.