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Intelligent finance—an emerging direction 

Authors: Heping Pan a;  Didier Sornette b; Kenneth Kortanek c
Affiliations:   a International Institute for Financial Prediction (IIFP) IIFP China, Finance Research Centre of China, Southwest University of Finance and Economics, and IIFP Australia, Australia
b Department of Management, Technology and Economics (D-MTEC, KPL H22), Switzerland
c University of Pittsburgh, Pittsburgh, PA, USA
DOI: 10.1080/14697680600760753
Publication Frequency: 8 issues per year
Published in: journal Quantitative Finance, Volume 6, Issue 4 August 2006 , pages 273 - 277
Formats available: HTML (English) : PDF (English)
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Abstract

Intelligent finance represents a new direction recently emerging from the confluence of several distinct disciplines in financial market analysis, investing and trading, removing any historical or artificial barrier between them. It is conceived as the science, technology and art of the comprehensive, predictive, dynamic and strategic analysis of global financial markets, towards a unification and integration of academic finance and professional finance. As a comprehensive approach, it is a quest for absolute positive and non-trivial returns in investing and trading by exploiting complete information about financial markets from all general perspectives, drawing ideas, theories, models and techniques from many related academic disciplines, such as macroeconomics, microeconomics, academic finance, financial mathematics, econophysics, behavioural finance and computational finance, and from professional schools of thought, such as macrowave investing, trend following, fundamental analysis, technical analysis, mind analysis, active speculation, etc. In terms of risk management, intelligent finance is expected to minimize the very last risk—the incompleteness of an investing or trading method or system. The theoretical framework of intelligent finance consists of four major components: financial information fusion, multilevel stochastic dynamic process models, active portfolio and total risk management, and financial strategic analysis. We first provide the background from which intelligent finance has recently emerged as a new direction in finance research and industry, and then provide a brief theoretical review of the predictability of financial markets since Bachelier. After these background discussions, we clarify the major research directions of intelligent finance.
Keywords: Intelligent finance; Financial information fusion; Multilevel stochastic dynamic process models; Active portfolio and total risk management; Financial strategic analysis
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