How Danelfin Works

Maximizing Investments with Explainable Artificial Intelligence

In an ever-evolving financial landscape, making informed investment decisions is paramount. This is where Danelfin, a cutting-edge stock analytics platform, powered by Explainable Artificial Intelligence (AI), steps in. We’re dedicated to providing you with the tools and insights needed to navigate the complex world of stocks and Exchange-Traded Funds (ETFs) with confidence.

 

Unleashing the Power of Explainable AI

At the heart of Danelfin lies Explainable Artificial Intelligence, a revolutionary technology that brings transparency and clarity to investment strategies. Our AI-driven platform rates stocks and ETFs using a comprehensible global AI Score, ranging from 1 to 10. The higher the score, the greater the likelihood of outperforming the market in the next three months.

 

Demonstrated Performance and Predictive Capabilities

We don’t just stop at theory – we back our claims with concrete results. Danelfin’s AI Score has been instrumental in developing a robust investment strategy for US-listed stocks. This strategy yielded an impressive +158% return from January 3, 2017, to December 30, 2022. In comparison, the S&P 500 only saw a +70% increase during the same period. It’s important to note that these results are based on rigorous backtesting and are not indicative of future performance.

 

The Essence of the AI Score

Our AI system conducts an in-depth analysis of all US stocks, STOXX Europe 600 stocks, and US-listed ETFs. It processes hundreds of intricate indicators and thousands of features to generate the AI Score, a user-friendly metric that assesses the probability of beating the market in the next three months. For US-listed stocks and ETFs, the benchmark is the S&P 500 TR index, while for European stocks, it’s the STOXX Europe 600 index. Stocks and ETFs with AI Scores ranging from 7 to 10 boast a higher likelihood of market outperformance, while those with scores from 1 to 3 face lower probabilities.

 

Translating Scores into Actionable Insights

Navigating the complexities of stock investments requires more than just numbers. That’s why Danelfin translates AI Scores into practical ratings and signals for short-term investment strategies. Beneath the AI Score of a stock or ETF, you’ll find its corresponding rating. It’s important to remember that while our Artificial Intelligence provides valuable probabilities, investment decisions should be made with a comprehensive understanding of the market.

 

Trade Ideas for Informed Decision Making

The Trade Ideas section on Danelfin is designed to highlight potential trades where our AI has displayed exceptional accuracy since 2017. We focus on signals with a minimum 60% win rate for Buy or Strong Buy (Long) and a minimum 60% loss rate for Sell and Strong Sell (Short). This empowers you to filter potential trades based on your preferred investment horizon of 1, 3, or 6 months. Additionally, you can view the historical track record of buy/sell signals and the expected forecast from our AI for different time frames.

 

The Technical Marvel Behind Danelfin

Danelfin’s AI Score is a result of rigorous analysis. Our AI delves into over 10,000 features per stock/ETF per day, drawing from a pool of more than 600 technical, 150 fundamental, and 150 sentiment indicators for every asset. This level of predictive capacity and data processing is beyond the scope of human analysis.

 

Examples of Indicators Analyzed Daily

Technical Indicators:

  • 52 weeks high %
  • RSI (Relative Strength Index)
  • RSI Slope
  • MACD (Moving Average Convergence Divergence)
  • Fibonacci
  • Distance to support
  • Momentum
  • Volatility
  • WillR
  • MFI (Money Flow Index)
  • …and many more.

 

Fundamental Indicators:

  • CROCI (Cash Return on Capital Invested)
  • EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
  • EPS Growth this year
  • P/E (Price-to-Earnings ratio)
  • P/FCF (Price-to-Free Cash Flow ratio)
  • P/B (Price-to-Book ratio)
  • P/S (Price-to-Sales ratio)
  • Gross Margin
  • F-Score
  • ROA (Return on Assets)
  • Sales Q/Q (Sales Quarter over Quarter)
  • …and many more.

 

Sentiment Indicators:

  • Average price target analysts
  • EPS estimate for next quarter
  • Short Float
  • Insider Transactions
  • Hedge Fund Transactions
  • …and many more.

 

Decoding AI Scores: From Data to Probabilities

Our AI doesn’t just crunch numbers; it learns from market behavior and stock performance over the latest 252 and 500 market days for the US and European markets, respectively. It identifies alpha signals, the unique features of stocks and ETFs that contribute most to generating alpha (positive and negative) after 60 market days. These alpha signals are then harnessed in a multitude of decision trees to calculate the probability of beating the market in the next 3 months. The final probability is an average of all probabilities calculated by each decision tree.

 

How Danelfin Works
How Danelfin Works

 

Alpha Generation Capabilities: A Track Record of Success

Our commitment to excellence is reflected in our track record. US Stocks with the highest AI Score (10/10) have consistently outperformed the market (S&P 500) by an average of +20.08% after 3 months over the last five years. Conversely, stocks with the lowest AI Score (1/10) have underperformed the market by an average of -30.92% over the same period.
Universe: US-listed stocks
Date range: December 30, 2016 – June 27, 2022
Trading days: 1,445
Sample size: 8,165,695 (1,445 x 5,651)
Calculation: Stocks’ average alpha after 3 months per AI Score every day. Charts show the average annualized alpha after 3 months per AI Score for the 1,445 trading days.

 

Empowering Investors Globally

European stocks with the highest AI Score (10/10) have also demonstrated impressive performance, outperforming the market (STOXX 600) by an average of +22.65% after 3 months over the last 3+ years. Conversely, stocks with the lowest AI Score (1/10) have underperformed the market by an average of -8.12% over the same period.
Universe: STOXX Europe 600 stocks
Date range: January 7, 2019 – November 21, 2022
Trading days: 1,009
Sample size: 605,400 (1,009 x 600)
Calculation: Stocks’ average alpha after 3 months per AI Score every day. Charts show the average annualized alpha after 3 months per AI Score for the 1,009 trading days.

 

Elevating ETF Investments

Over the past five years, US-listed ETFs with the highest AI Score (10/10) have recorded an average annualized performance of +8.29% after 3 months. In stark contrast, ETFs with the lowest AI Score (1/10) achieved only an average performance of +1.20%.
Universe: US-listed ETFs (2044 ETFs)
Date range: January 9, 2017 – October 31, 2022
Trading days: 1459
Sample size: 2,982,196 (1459 x 2044)
Calculation: ETFs’ performance after 3 months per AI Score every day. Charts show the average annualized performance after 3 months per AI Score for the 1459 trading days.

 

Fundamental, Technical, Sentiment, and Low Risk Subscores

While the AI Score provides a comprehensive overview, our platform offers specific subscores tailored to individual investment styles. Fundamental, Technical, and Sentiment subscores assess the probability of beating the market based on specific indicators. The Low Risk subscore gauges negative price fluctuations, offering insights into downside risk. It’s crucial to note that the AI Score is not an average of these subscores, but a holistic evaluation of all available data.

 

Transparency and Clarity through Explainable AI

At Danelfin, we believe in full transparency. Our Explainable AI ensures that you have access to the features and indicators considered by our Artificial Intelligence in calculating stock and ETF scores. There are no hidden algorithms; everything is clear and comprehensible. Alpha signals are presented in green (positive) or red (negative) based on their relevance to alpha odds.

 

Tailoring Strategies to Your Investment Style

We understand that investors have diverse preferences. That’s why Danelfin offers Fundamental, Technical, and Sentiment subscores to align with your chosen investment style. Whether you prioritize fundamentals, technical analysis, or sentiment indicators, our platform empowers you to make decisions that resonate with your strategy.

 

Mitigating Risk with Low Risk Subscores

Investing isn’t just about potential gains; it’s also about managing risk. Our Low Risk subscore evaluates negative price fluctuations over the latest 500 days. The higher the subscore, the lower the downside risk. It’s an invaluable tool for investors seeking a balanced approach to their portfolios.

 

Empowering You to Build a Robust Portfolio

Danelfin goes beyond providing scores; it’s a comprehensive platform designed to optimize your investment portfolio. You can monitor your portfolio’s average AI Score and receive timely alerts regarding changes in your stocks and ETFs’ AI Score. These alerts serve as a guiding light, helping you fine-tune your portfolio for optimal performance.

 

Seizing Opportunities with Score Evolution

The Score Evolution section is a vital tool for investors with a long-term perspective. It allows you to track the historical AI Scores of a specific stock or ETF, providing invaluable insights into its performance over time. If a stock or ETF is on your radar but currently boasts a low AI Score, patience may be your best ally. Waiting for an upgrade to a BUY (7-8-9) or STRONG BUY (10) rating could significantly enhance your odds of market outperformance in the next 3 months.

 

The Danelfin Advantage

Danelfin is more than a platform; it’s a commitment to empowering investors with the tools and insights they need to thrive in today’s dynamic market. With a dedication to transparency, clarity, and unparalleled performance, we’re here to help you make data-driven investment decisions with confidence.
Get Started Today
Visit Danelfin now and embark on a journey of informed and empowered investing. Join us in maximizing your investments with the precision of Explainable Artificial Intelligence.

 

[Disclaimer: Danelfin’s Artificial Intelligence calculates probabilities of market performance based on historical data. It does not predict actual results. Past performance is not indicative of future results. Danelfin’s AI Scores and ratings should complement, not replace, professional investment advice or independent research.]


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