Although data from traditional sources like financial statements or economic indicators can be a solid foundation for decision-making, their focus on past performance may leave investors and other financial stakeholders with a limited view of the risks and opportunities associated with the current market situation.
Alternative data offer a comprehensive solution, as they are generated at a higher frequency by non-conventional sources, including credit card transactions, business processes, ESG reports, satellite imagery, web traffic, and more. They can be leveraged to identify emerging market trends to optimize financial strategies and minimize risks, allowing financial stakeholders to gain a competitive advantage.
To obtain alternative data, companies can choose to compile raw data directly from public sources or request organized datasets from specialist firms. However, with so many resources available, it can be difficult to determine which alternative data providers are reliable and relevant. Hence, this article will provide tips on choosing the right alternative data provider to help you streamline your financial strategies.
Table of Contents
Data quality should be a top priority to ensure reliable analysis and well-informed decisions. The provider’s alternative data should be accurate, free from errors or inconsistencies, that could skew your results.
Moreover, high-quality alternative data should also be comprehensive, as incomplete data with gaps or missing information can limit your analysis, thus preventing you from drawing accurate conclusions for your financial strategies.
Ask about the provider’s quality control measures. How do they ensure the accuracy and reliability of their data? Do they have verification protocols to identify and correct errors? By understanding the provider’s validation processes, you can ensure the data’s integrity and minimize the risk of flawed investments.
The alternative data should be timely and up-to-date to reflect current market conditions. Delayed data often leads to missed opportunities or incorrect assessments.
When evaluating an alternative data provider, inquire about their data refresh frequency. How often is the data updated? Is the refresh schedule consistent and reliable? A provider with frequent data updates ensures that you have access to the most current information.
Additionally, ask about the provider’s data pipeline and delivery mechanisms. How does the data flow from its source to your hands? Are there any delays or bottlenecks in the delivery process? A streamlined data delivery process can help minimize the time lag between data collection and availability, helping you stay ahead of market trends.
Data coverage refers to the breadth and depth of the data offered by a provider. This is crucial to ensure the alternative data aligns with your specific investment or business objectives.
For example, you may have to consider the geographic coverage of the alternative data and make sure the provider offers data from the regions or countries of your targeted market. Industry focus is another important aspect, as you may need data on specific sectors to develop a comprehensive strategy.
Furthermore, the granularity of the data must be considered as well. It should be detailed enough to provide valuable insights. For instance, if you’re analyzing consumer spending habits, you may need data that reveals individual transactions rather than aggregated data.
A provider that offers accessible data will save you time and effort, especially offer seamless API integration and cloud-based access, as it allows you to use and integrate the data into your existing systems easily. Ensure that the data is delivered in a format compatible with your existing software and tools to eliminate the need for data conversion.
You should also consider how the alternative data can be integrated into the workflow. It’s best if the data provider can provide documentation or any reliable support to help you navigate the data, understand its structure, and leverage its full potential. This can help you maximize the value of your data and avoid unnecessary challenges during usage.
Data security is a critical concern when dealing with sensitive financial data. A reputable alternative data provider will have robust security measures in place, including encryption, access controls, regular security audits, and incident response plans. This can help protect the alternative data from unauthorized access, breaches, and misuse.
A provider’s reputation is a strong indicator of the alternative data’s reliability and trustworthiness, so you should try researching their track record in the industry to gain valuable insights into their capabilities.
Customer testimonials can provide firsthand accounts of the provider’s performance. Read reviews from other customers to get a sense of their satisfaction with the data quality and service scope. You can also look for case studies that align with your specific financial goals to understand how the provider’s data has been used successfully in certain industries.
On top of that, you should also choose a provider that prioritizes customer support. A reputable data provider should have a dedicated support team that is readily available to answer your questions, address issues, and assist you through the entire collaboration.
A provider’s commitment to innovation is essential in the rapidly evolving landscape of alternative data.
For example, some providers constantly explore new data sources to ensure they can offer unique and valuable insights. There are also providers that leverage advanced technologies such as artificial intelligence, machine learning, and natural language processing, even large language models (LLMs) to analyze unstructured data, giving you deeper insights into market trends.
Moreover, some providers even partner with industry leaders to develop innovative data solutions and products.
By choosing a provider with a forward-thinking approach, you can ensure access to the latest data resources, helping your company stay competitive and adapt to changing market conditions.
TEJ stands out as a trusted alternative data provider that prioritizes data accuracy and relevance. With daily updates, TEJ provides a comprehensive view of the current market situation. Our Watchdog Database provides up-to-date news and event scores to help you obtain the latest information on listed companies in Taiwan’s stock market.
Furthermore, our ESG Event Radar Score (ERS) offers daily assessments of associated companies, helping you identify potential operational ESG risks or opportunities in your chosen field.
TEJ’s commitment to providing excellent alternative data extends beyond our own platform. We have established a strong collaboration with Eagle Alpha, Neudata, and Snowflake, leading platforms for datasets and analytics. By providing alternative datasets, we can ensure that our high-quality data is accessible to a wider audience of investors and researchers.
Learn more about TEJ’s Alternative Data solutions to elevate your investment strategy!
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