AI to Help Identify Investor Behavior
Photo by SOMKID THONGDEE / Shuttestock.com
Artificial intelligence developed at Corvinus University of Budapest provides identification of types of investors, as well as recommendations for potential investments.
"Our model proved that various demographic factors can influence an individual's investment preferences and recommendations, for example, as income increases, fewer and fewer women become investors," discussed Andrea Kő, a researcher at Corvinus and one of the authors of the study, in a statement shared with the Budapest Business Journal.
Kő, together with fellow Corvinus researchers Asefeh Asemi and Adeleh Asemi, developed an AI model which was able to collect and sort demographic data, provide insight into investor behavior, as well as provide guidance to future investors.
The data was collected through an online survey of 1,542 participants, done in 2019. The survey enquired about various traits of the respondents, such as age, gender, occupation, education, place of residence, income level, personality traits, openness to digital solutions, financial situation, savings, future financial plans, and how aware they are of possible financial risks.
Types of Investors
According to the statement, the AI was able to identify three types of investors based on the collected data.
The first group, identified as those averse to the stock market, typically only buy government securities, investment funds and shares, but often stay away from government bonds. Based on the demographic data, this category consists of investors with postgraduate degrees and workers in lower management positions.
The second type of investor, according to the AI model, was labeled the omnivore category, as it reflects the investors who find opportunity in, in addition to shares, investment funds and government securities listed on the stock exchange, voluntary pension funds and government bonds. This category typically includes respondents aged around 45, living outside of Budapest, who earn near HUF 300,000 per month.
The final category of investors were found to neglect investment funds, rather, similarly to the second group, they focus on popular investment instruments such as shares listed on the stock exchange, voluntary pension funds, and government securities. Based on the demographic characteristics, this includes respondents with a monthly income exceeding HUF 500,000, as well as respondents holding a lower management position and having a university degree.
Kő also commented on the various abilities of the AI, apart from its identification system.
"[...] the new investment recommendation system developed at Corvinus is also unique in that it uses feedback from investors and experts, and it can make more accurate and relevant offers, so the system can be further developed. The model is also capable of operating on the basis of partly faulty or incomplete data,” she shares.
The recommendation system can also be useful for investment companies, individual investors and fund managers in making their investment decisions. The data collected can provide valuable insight into how customers use and evaluate financial services and products. This can help predict the behavior of current and potential investors and shed light onto emerging investment trends.
The study is available here.
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