Pricing and Trading
Securities pricing and portfolio management are areas ideally suited for the use of high performance computing systems. The ability to run multiple scenarios including modeling, interest rate analysis and other simulations that could take days to run on a workstation can be completed in hours using an HPC system. An HPC system can also be used in high frequency trading to move in or out of positions in fractions of seconds as opposed to minutes or hours if performed manually. Traders can also take advantage of arbitrage conditions to realize additional profits.
NordStar offers solutions for businesses from small broker firms to large brokerage houses. NSG realizes that the requirements for HPC systems differ among firms based on the firms’ specific activity. We can assist you in designing and implementing a system that allows you to gain a competitive advantage in your market. NSG specializes in providing 2 – 64 node clusters for the SMB market and can provide a system that offers you the best value for your budget. NSG solutions are based on tier one manufacturers like Hewlett Packard and Hitachi.
Three major categories of pricing and valuation systems are:
• Interest Rate Analysis
• Macroeconomic Variations
• Government Regulation Analysis
Pricing is the establishment of a value for a security or group of securities. This can be in the form of market fund, a derivative or a currency exchange. Investment houses use pricing and valuation models to not only assign value to funds, but also test the strength and stability of the funds.
When investment houses or banks package a group of securities, the assumptions are modeled against both historical and probable future events to gauge an outcome. You can determine the probability of a security rising or falling in value by using statistical equations. Data results can be used to formulate an appropriate action plan. The more complex the inputs and assumptions, the greater the need for an HPC system.
• Underlining Asset Modeling
• Financial Instrument Simulation
• Arbitrage Opportunities
Derivative securities make up a large portion of the HPC market. Derivatives are complex financial instruments by their very nature that include a variety of financial contracts including puts, calls, swaps, futures and forwards. This complexity with the added intricacy of derivative trading makes HPC systems a necessity to meet the computational challenges. These specific challenges are created due to the sheer volumes of data that need to be analyzed. The time sensitivity requirements to make computational results useful in a meaningful time frame require the use of a robust HPC system.
• Fundamental Analysis
• Microeconomic Study and Simulation
• Stock Modeling
HPC systems are used in stock trading in two major ways, high-frequency trading or algorithmic trading. Trading applications analyze the difference in securities pricing between stock markets for opportunities to maximize profits. These analyses fall into three primary categories: arbitrage, market making and ticker tape reading. For example, stocks that close higher in Europe as compared to North America are analyzed to determine if trades can be made to maximize profit. Securities are also studied for events that will affect the value of the security, especially when a company is announcing a new product/service or other major events. HPC systems make it possible to model the variables within a timeframe that will provide useful results for decision making.