What is Alternative Data? Examples, Providers & Datasets to Buy

Alternative Data Use Cases in Detail

Use Case 1: Investment Research and Analysis

Alternative data is widely used in investment research and analysis to gain insights into various industries and companies. By analyzing alternative data sources such as social media sentiment, web scraping, satellite imagery, credit card transactions, and more, investors can make more informed decisions about their investment strategies. This data can provide valuable information about consumer behavior, market trends, and company performance, helping investors identify potential investment opportunities and risks.

Use Case 2: Risk Management and Fraud Detection

Alternative data is also utilized in risk management and fraud detection across various industries. By incorporating alternative data sources into risk models, organizations can better assess and mitigate potential risks. For example, credit card companies can analyze transaction data to identify fraudulent activities and prevent financial losses. Insurance companies can leverage alternative data to assess the risk profile of policyholders and determine appropriate premiums. By utilizing alternative data, organizations can enhance their risk management practices and improve fraud detection capabilities.

Use Case 3: Supply Chain Optimization

Alternative data plays a crucial role in supply chain optimization by providing real-time insights into various aspects of the supply chain. Companies can leverage alternative data sources such as IoT sensors, weather data, and social media trends to monitor and predict demand patterns, optimize inventory levels, and improve logistics operations. By analyzing alternative data, organizations can make data-driven decisions to streamline their supply chain processes, reduce costs, and enhance overall operational efficiency.

Main Attributes of Alternative Data

Alternative data refers to non-traditional information that is used to gain insights and make informed decisions. It can be sourced from a variety of alternative data sources such as social media, satellite imagery, web scraping, credit card transactions, and more. The attributes of alternative data can vary depending on the specific dataset, but some common attributes include time-stamped data, unstructured data, high volume and velocity, diverse data types, and the ability to provide real-time or near real-time information. These attributes enable alternative data to offer unique perspectives and complement traditional data sources. Here’s a table of the main attributes you might find on Alternative Datasets:

Where Can I Buy Alternative Data?

You can explore our data marketplace to find a variety of Alternative Data tailored to different use cases. Our verified providers offer a range of solutions, and you can contact them directly to discuss your specific needs.

How is the Quality of Alternative Data Maintained?

The quality of Alternative Data is ensured through rigorous validation processes, such as cross-referencing with reliable sources, monitoring accuracy rates, and filtering out inconsistencies. High-quality datasets often report match rates, regular updates, and adherence to industry standards.

How Frequently is Alternative Data Updated?

The update frequency for Alternative Data varies by provider and dataset. Some datasets are refreshed daily or weekly, while others update less frequently. When evaluating options, ensure you select a dataset with a frequency that suits your specific use case.

Is Alternative Data Secure?

The security of Alternative Data is prioritized through compliance with industry standards, including encryption, anonymization, and secure delivery methods like SFTP and APIs. At Datarade, we enforce strict policies, requiring all our providers to adhere to regulations such as GDPR, CCPA, and other relevant data protection standards.

How is Alternative Data Delivered?

Alternative Data can be delivered in formats such as CSV, JSON, XML, or via APIs, enabling seamless integration into your systems. Delivery frequencies range from real-time updates to scheduled intervals (daily, weekly, monthly, or on-demand). Choose datasets that align with your preferred delivery method and system compatibility for Alternative Data.

How Much Does Alternative Data Cost?

The cost of Alternative Data depends on factors like the datasets size, scope, update frequency, and customization level. Pricing models may include one-off purchases, monthly or yearly subscriptions, or usage-based fees. Many providers offer free samples, allowing you to evaluate the suitability of Alternative Data for your needs.

What Are Similar Data Types to Alternative Data?

Alternative Data is similar to other data types, such as Stock Market Data, ESG Data, Credit Rating Data, Commodity Data, and Currency Data. These related categories are often used together for applications like Hedge Funds and Algorithmic Trading.