Exploring Financial Markets and the “R Conference”

Thank you to Andrew McCoy, Graduate Finance Interest Network Vice President, for contributing this post.

The fourth annual “R/Finance” conference was held on the UIC campus in the Student Center East on May 11th and 12th and it proved to be very insightful and interesting, even to those of us who are not Ph.D statisticians or experts in finance. The conference was a gathering of professors, students and industry experts showing off their work and research in the uses and applications of the statistical analysis program “R” to various financial markets.

One notable speaker was Blair Hull who spoke first on Friday morning. He compared trading to the game of blackjack. He uses the program “R” to develop trading strategies which achieve a Sharpe ratio of 15 or more which is an indicator of risk versus reward. On Saturday, Professor Sinha started off a series of speakers who presented their research on how financial news can be used to analyze and predict stock market movements.

What was interesting to me was how the program “R” can be used to search for certain words in news articles and then organize them into data sets that can determine if the sentiment is negative or positive. This data can then be analyzed against real time stock price movements; in effect quantifying the news to determine if a stock has under reacted or overreacted to a certain news event. In the current world we’re living in one of the most valuable commodities is information. This conference demonstrated the value in being an expert at using programs like “R” to gather and analyze financial market information and put it to good use.

To learn more about the Graduate Finance Interest Network, please email GFIN@uic.edu or visit:  http://business.uic.edu/programs-and-degrees/liautaud-programs/liautaud-info/student-orgs.