Hedge Fund Robotic Process Automation and Systems Integration

Our client is a hedge fund (Fund) quickly transitioning from startup to growth mode.  As a financial institution, they are reliant on accurate data and records for regulatory and brokerage requirements.  Many of their trading decisions are based on quickly filtering through current news and data from various sources.  

Challenge

As a new startup, Fund used processes that were less efficient but easy to implement.  As they have grown, these processes required improvements to allow them to be more efficient and make more timely trading decisions:  

• Fund used internal systems that relied extensively on Excel-based, manual reporting and analysis processes.  Email was used for documentation of completed actions for validation and verification.      
• Trade data from third party vendors such as prime brokers and risk management platforms was manually entered for each trade.  
• Research required significant manual effort to search and filter content from Internet sources and information vendors.

This initial approach worked for a small hedge fund with only a few employees, but as the fund grew, the executive team saw impediments to scale. They needed to automate internal systems to better leverage employee time for trade analysis and strategic discussion rather than manual process management.

The leadership team also wanted to improve their storage and analysis of historical data, which previously offered minimal opportunities to analyze their decision-making for systematic biases or missed opportunities.

Solution

After a comprehensive assessment and collaborative planning phase, the CorrDyn Team:

• Developed a customized research automation system that extracted key indicators from thousands of news articles to increase the speed of analysis for trade opportunities
• Created a Trades Portal to manage current and future information about Fund’s internal trades, including sending internal reporting emails when trades are completed
• Extracted, cleaned, and normalized historical trade information from emails to provide a baseline dataset to seed the Trades Portal.
• Integrated the Trades Portal with external service providers to automatically send sensitive trade information for integration with providers’ systems that support Fund’s accounts

• Designed and launched an automated business intelligence suite in Tableau that provides ongoing visibility to leadership regarding Fund’s positions with various brokers, companies, and internal positions

Results

Fund has outperformed the HFRX Global Hedge Fund Index in each of the past five years, with a near-zero correlation with the S&P 500. Their fund has more than quadrupled in size over the course of those years, with only one additional hire added to maintain internal processes and data.  The automation provided by CorrDyn has allowed Fund to reinvest resources into income producing staff and activities instead of overhead and administrative costs.