TCS Real Time™ is a quantitative, systematic process generating robust risk-return profiles across different asset classes. It is ready to implement and will connect seamlessly to your organization. Users can opt for the Systematic Tactical Equity or the Systematic Tactical Diversified (Equities + Govies) processes (please see the relevant profiles and performances here and there).
TCS Real Time™ is an industrialized and customizable research service allowing financial markets professionals to create innovative investment processes by targeting the key indicators that improve strategies efficiency and risk management.
The TCS Real Time™approach is inspired by “Multifractal” and influenced by the theories of non-linear dynamic systems. In order to understand those systems, the best analogy is with weather forecasting, where the sensitivity to initial conditions is at the very centre of complexity.
The impossibility to generate reliable weather forecasts over the medium term (as opposed to the short term) originates in the second law of thermodynamics, characterised by entropy, about which statistical thermodynamics remind us that entropy can be interpreted as the measure of the degree of disorder of a system at a microscopic level. The higher the entropy of a system, the less its elements are organised, tied together, and able to produce mechanical effects.
Consequently, the time scale is crucial in the analysis. Indeed, the longer the horizon, the less precise the information will be, and the more entropy will increase. This is Shannon entropy (in his information theory): “entropy indicates the quantity of information needed so that the recipient can determine unambiguously what the sender has transmitted. If the recipient is weak in information about the message, the entropy (i.e. uncertainty) will be high about this message”, the variation in entropy being always positive.”
Furthermore, entropy is a discontinuous notion, meaning that it tends to produce jumps of undetermined origins. Indeed, even if the quantity of information was very large, the causes of the phase transitions are not determined. Therefore we should only aim at predicting the dynamic of a system up to a certain limit and with a given probability.The analogy with prices predictions has been demonstrated by many academic studies. The efficiency of financial markets previsions is similar to weather forecasting: predicting is difficult, by nature probabilistic and the quality of the prediction worsens as the time horizon lengthens.Based on these findings, TCS Real Time™approach aims at offering an actionable synthesis in a world where the overwhelming complexity is making predictions and the associated risk management more and more difficult.The TCS Real Time™approach is also a potential application of the “antifragile” thesis from NassimTaleb, which essentially shows that the development of adaptability can be favoured by an uncertain environment.
Finally, sustainability is obviously a founding concept of the philosophy behind TCS Real Time™.
Industrialisation of TCS Real Time ™
The major feature of TCS Real Time™ does not lie in its algorithmic complexity but in its ability to run to perfection, in real time, simultaneous processes over several modules, thus analysing a large quantity of data while validating in real time the availability and quality of the data used in these computations.
Performance tests involve low latency and velocity in “executing” more than 30 modules in high frequency without any difficulty and in real time, while running in parallel both the numerical analysis and cycles detection modules.