Mitsubishi’s kabu.com to offer new AI-based risk management tool

Maria Nikolova

“AI Derivatives” is a risk management tool that aims to predict how a given position in futures or options will be affected in various market situations, as extreme as Brexit or the “Kuroda Bazooka”.

Japanese online trading company kabu.com Securities, a subsidiary of Mitsubishi UFJ Financial Group Inc (TYO:8306), continues its push into artificial intelligence (AI). The latest AI solution the company is about to offer to its clients is called “AI Derivatives” and is set to go live in January 2018, replacing the current risk management tool for futures and options traders – “Futures OP Navi”.

The new solution is interesting for its “stress test” function. It will simulate how customers’ real or virtual trading positions in futures and options will be affected by extreme market events. To model such situations, “AI Derivatives” will use a number of such high-volatility events like Brexit and the Kuroda Bazooka. There will be also information on the underlying asset price, the days left until SQ day, etc.

The planned launch marks another step by kabu.com into the world of AI. In May this year, the broker introduced “AlpacaSearch for kabu.com”, a solution developed in collaboration with AI startup AlpacaDB Inc. The AI system scans the share prices of Japan-listed companies in order to identify shares showing similar trends. The AI technology detects correlations that human traders cannot notice and, after that, signals trading opportunities. In addition, this solution detects overvalued and undervalued stocks by identifying correlating stock charts. These findings are then used for a trading strategy where investors go long on the underperforming shares and go short on the overperforming shares in a correlated pair.

And, in July this year, Kabu.com announced a partnership with xenodata lab to deliver another offering based on AI technologies to its clients. The service, called “xenoFlash for kabu.com”, automatically analyzes the financial results of listed companies, based on a natural language processing mechanism. Based on this analysis, an infographic with the highlights is delivered. The “flash” part of the service name means that the analysis is made at high speed – it should take no more than a minute. In the beginning, the service will cover 2,300 companies.

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