Leda Braga | Applying data science to investment strategies

10/14/22 • 36 min

Leda Braga is the founder and CEO of Systematica Investments, a hedge fund that uses data science-driven models to support its investment strategies. Leda was born and raised in Brazil and found her way into the financial sector after getting her PhD in engineering and spending several years as an academic.

Her financial career started with seven years in investment banking at JP Morgan and then she joined the hedge fund startup BlueCrest in 2000. She explains that while her funds did very well during the 2008 financial crisis, the time felt like an existential crisis because you didn’t know if the major investment banks were going to survive. But she said it was a formative time and she learned many lessons. Several years after the financial crisis, she spun off her own firm, Systematica Investments focused on systematic trading.

Leda explains that systematic investment management is data science applied to investment. The systematic approach makes the investment process less reliant on the random nature of forecasting and more reliant on risk control in portfolio construction.

Both discretionary traders and systematic traders are looking at information to try to make decisions. Those who do it on a discretionary basis tends to look at the data and make a decision to make money on a trade. Those that look at data on a systematic basis build data-driven processes for trading strategies for certain risk profiles and preferences that will produce consistent returns over time. She says the responsibility weighs heavily on her to ensure a good return because people's pensions are part of the money her firm manages.

While she believes strongly in the power of leveraging data science in investment, we’re not yet at a point where AI allows us to do “autonomous investing” because there's a large element of randomness in markets and relatively sparse data so learning algorithms have limited use. She says that the only way it might be possible is if you’ve compartmentalized and narrowed the scope to the extent that you have a controlled amount of randomness. Learn more about Leda and systematic investing in her 2018 WIDS presentation, When Data Science is the Business.

RELATED LINKS
Connect with Leda on LinkedIn or Twitter
Find out more about Systematica Investments
Connect with Margot Gerritsen on Twitter (@margootjeg) and LinkedIn
Find out more about Margot on her Stanford Profile

Previous Episode

Jessica Bohórquez | Using AI for leak detection in water pipelines (Spanish)

A Colombian engineer, Jessica is fascinated by the processes and complexity of water supply systems in urban areas.In her post doc research in Australia, she brings together her expertise on the water hammer and transient flow waves to create an AI model that is able to identify where pipeline defects are faster and more accurately than existing techniques.

She explains that in data science, the most important stage is understanding the problem. You need to bring in basic knowledge of the problem and expertise from other disciplines that are involved in a problem and combine that with artificial intelligence. AI is an important tool but just part of the solution. It’s critical to maintain all the legacy of knowledge and understanding of a problem. AI can make it simpler to apply, but you can’t leave behind the physics or knowledge of the hydraulic part of water movement.

Working in industry, she has found that it’s important to first understand how the system works. In these large companies in charge of delivering water, each person has different objectives, so you need to understand how the company works, who is in charge, what are their objectives, and how they measure their success. If your research project aims at those things, they will be more receptive and a better chance of success.

Jessica has learned in both research and industry consulting that nothing works the first time and it’s important to not to let those little defeats build up in your head. You need to trust yourself. There are many moments in life when you are criticizing yourself, and you realize that the biggest enemy you have is yourself. She just breaks down the problem into small parts and then solves each part one by one. She is passionate about teaching and inspiring young engineers about the importance of water and the future of this invaluable resource.

RELATED LINKS
Connect with Jessica on LinkedIN
Find out more about the University of Adelaide
Connect with Cindy Orozco Bohorquez on LinkedIN

Next Episode

Lesly Zerna | Teaching and learning data science in Latin America (Spanish)

Lesly Zerna earned her undergraduate degree in Telecommunications Engineering at the Bolivian Catholic University and then traveled to Brussels to complete a Masters in Computer Science. After returning to Latin America, she began teaching data science and AI both in universities and virtual platforms and today her courses have thousands of online students. She brings insights from her experiences working in large companies overseas to her students in Latin America.

For those just starting in data science, she says you must first identify your personal learning style (e.g., visual or text) to improve your learning experience and start with a general overview of the field. Next, find a practical topic you’re interested in, and look for projects, examples, authors, researchers who are working in that area. Do all of this while continuing to develop the fundamental skills you need (e.g., languages, platforms, frameworks) in data science.

Lesly transmits her passion for learning to her students by using real scenarios instead of theory in textbooks. She lets them experience what works, shows the development process, and where common mistakes are made. She says it’s important for students to find where the problem is, know how to solve it, and make decisions. She believes there’s a lot to learn from the world of entrepreneurshipas you not only develop a project, you also have to develop the skills to explain and present the project, sell it, and negotiate.

She believes that mentoring is essential to break down barriers for women. It can help dispel myths and biases about women in science and technology jobs, and learn from successful women that in spite of a hard path, they were able to achieve and follow their dreams.
RELATED LINKS
Connect with Lesly on LinkedIN
Find out more about the Universidad Privada Boliviana
Connect with Cindy Orozco Bohorquez on LinkedIN