FS Sustainability: AI-based trading platform to integrate ESG data

In the News

Publish date: 18 November 2021

Jaaims, an AI-based trading platform, has boosted its algorithmic trading functionality by integrating ESG data and scores into its system.

Jaaims allows users to buy and sell stocks using a proprietary AI algorithm that integrates analysis of fundamental financial information with unstructured data sets that measure market sentiment and emotions.

Jaaims is integrating data and ESG scores from research provider Sustainalytics to augment their existing datasets, said Jaaims CEO Tui Eruera.

Jaaims notes that their AI algorithm can analyse a stock in 73 seconds, with real-time data every 15 minutes.  Jaaims uses over 250 different data points to generate stock recommendations.

“We use AI to understand what we call unstructured data, Eurera said. “What we do is obtain structured data and structure it into a way that we can analyse it and draw sentiment from that.”

Jaaims believes that this hybrid approach of utilising emotional influence with strong fundamentals can help to produce short term positions that can deliver stronger returns.

Augmenting the algorithm with ESG provides a broader picture and meets customer demand, Eruera said.

“When it comes to the ESG space, we know that climate change factors are really playing in,” he said. “Obviously, in Australia, there is a big movement away from coal. You can see that in big institutions and you can see that in super fund members who are speaking to super funds to ask questions like, are you invested in Whitehaven Coal, etc.”

Eruera also pointed to investor questions around governance issues as also influencing stock movements.

“The second one that people are thinking of now are governance – are boards diversified, who is on the board, do boards have policies around lobbying,” he said. “That sort of stuff plays into the understanding of companies as well. WE also use data on senior executives in companies – we look to understand the makeup of the senior executive teams to see if they are, say, 50/50 female, which obviously the aren’t.

“What we learnt is that these factors are starting to play a crucial role on how retail investors are analysing this data, especially the small and mid-cap stocks.”

Jaaims’ platform allows users to see an ESG performance summary of the company across three categories – underperformance, average performance and over performance, and can flag key risk industries such as production of palm oil, coal and weapons.

Jaaims also plans to modify the Smart Portfolio product to allow users to filter out the stocks that may not meet their ESG goals.

Jaaims has more than 3,000 customers since launching in 2020. Jaaims’ customers manage their share portfolio using the AI based trading algorithm, delivered on a low-cost subscription service through their mobile device.

View article original: https://www.fssustainability.com.au/ai-based-trading-platform-to-integrate-esg-data

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