Unlock Alpha with Customer-Supplier Momentum 

RedGraphs enhances traditional momentum strategies by analyzing stock performance across supply chain relationships. Instead of looking solely at a company’s past returns, the strategy considers the stock movements of its customers and suppliers to predict future performance.

• Customer Momentum: If a company’s customers are performing well, the company itself is likely to benefit, leading to potential stock gains.

• Supplier Momentum: While less direct, strong supplier performance can indicate improved efficiencies or product quality, potentially boosting customer stock prices.

• Results: A one-month lagged customer momentum strategy delivered a Sharpe Ratio of 1.07 and an annualized CAPM alpha of 6.7%, with positive returns persisting over six- and twelve-month periods.

By leveraging RedGraphs, investors can uncover unique alpha-generating opportunities that traditional momentum strategies overlook.

Fundamental Network Strategy

Traditional fundamental investing relies on financial metrics such as P/E ratios, revenue growth, and profitability to assess a company’s value. However, capital flows and financial relationships between companies provide a deeper layer of insight often overlooked in conventional analysis.

This strategy leverages network analytics from RedGraphs to identify companies that are strategically important within the financial ecosystem.

By analyzing capital flow connectivity, this approach uncovers hidden investment opportunities that may benefit from indirect financial relationships.

The following sections provide a detailed breakdown of the strategy, including key network metrics, portfolio construction, backtesting results, and actionable insights for investors.