Tesseract Capital Selects Alphacet to Aid Quant Model Development

Tesseract Capital, a New York City-based quantitative hedge fund, has implemented Alphacet’s Discovery solution as one of its alpha research and generation platforms.

The multi-asset class hedge fund mainly relies on internally developed platforms but chose the Alphacet Discovery product because it significantly reduces the research cycle time frame, according to Michael Graves, founder and principal of Tesseract Capital.

“The Alphacet product is designed to link together the historic database function within a research firm with the alpha generation front office business function in a way that’s makes it incredibly efficient,” he explains. “Someone that may not be a C++ programmer can get right in there and do a lot of sophisticated work.”

Tesseract will initially use the Discovery product for research purposes – for rapid idea development and vetting of financial models and strategies- but Graves says it could be extended to quant strategy deployment as well.

“The idea of straight-through processing with this product, where if you have a good idea you can check it, research and back test it and in theory plug it in and trade it is certainly an attractive option,” he says.

Graves adds that Tesseract trades in 21 countries and the multi-asset class functionality of Discovery made it very attractive for his firm.

Graves says that in these economic times when firms are looking to cut budgets, any product that can streamline the research and development process is important. “We’re pragmatists and we want to make money for our clients, we don’t care where the product comes from. If that means 99 percent of the time we build something and that is most efficient and cost effective so be it but other times we’ll look to outside products," he explains.

This shortened time frame is important for volatile, changing markets as well. “It will allow someone with market knowledge to rapidly adapt to changing conditions in a way that is very difficult when you’re just sitting there banging away at a database,” Graves says. “The immediate statistical feedback is so important to trading and risk management.”