Is artificial intelligence (AI) really coming for your job? Earlier this year, OCBC Securities issued close to 100 of its employees a challenge titled “Humans vs Machine”. Over six weeks, staff from various front- and back-office functions were tasked to predict weekly stock movements of names listed on the Singapore Exchange S68 (SGX) — all in a bid to outperform A.I. Oscar, Singapore’s first AI-powered stock-picker.
As participants were judged weekly, they mostly focused on high-volatility stocks with greater likelihood of price movements. Participants employed a variety of methods, including fundamental analysis, technical analysis and even intuition.
According to OCBC Securities, participants’ approaches varied, reflecting the multifaceted nature of stock trading.
Some traders delved into charts and financial reports, leveraging traditional analysis methods; others focused on high-volatility stocks, applying strategic research to maximise their chances of beating A.I. Oscar, whose name stands for OCBC Securities’ Customer Artificial-Intelligence Radar.
So, how did the vastly outnumbered A.I. Oscar perform under pressure? For six consecutive Mondays, A.I. Oscar generated stock picks from the SGX universe that were likely to outperform in the short term.
According to the organiser of the internal competition, A.I. Oscar reviews “large volumes of market data”, such as historical prices, as well as fundamental and technical indicators, to identify stocks with potential for “short-term price fluctuations”.
See also: OCBC Securities introduces AI Oscar to support investors through their trading journey better
“A typical report from A.I. Oscar will include charts showing recent share price movements, how a share compares with those of its competitors and the consensus estimates and recommendations of financial analysts who cover the stock,” says the organiser of “Humans vs Machine”. “For this, A.I. Oscar uses data provided by vendors such as LSEG Data & Analytics, formerly Refinitiv.”
Readers will be keen to know that A.I. Oscar recommended 19 stocks on the SGX during the six-week bout, which coincided with the reporting season for most listed companies’ full-year results.
Most picks are constituents of the Straits Times Index, such as the three banks, Keppel, ComfortDelGro C52 , Genting Singapore G13 , Sats and Sembcorp Industries U96 ; but A.I. Oscar’s recommendations for the period of February to early March also included China Aviation Oil (Singapore), Golden Agri-Resources E5H , Sheng Siong, Keppel REIT and Keppel Infrastructure Trust A7RU .
See also: OCBC Securities launches Singapore’s first AI stock-picker tool
A.I. Oscar proved its mettle when the competition concluded on March 8 — boasting an overall accuracy rate 17% higher than its human counterparts. While 29 of the 93 participants managed to outperform A.I. Oscar at least once, the stock-picker consistently demonstrated superior accuracy in its predictions, says the organiser.
“A.I. Oscar demonstrated a remarkable ability to predict stock movements with precision, particularly in bearish markets. As A.I. Oscar lacked emotions, it provided unbiased, data-driven insights. It processed vast amounts of market data, including stock prices, global indices and technical indicators to generate trading ideas.”
Participants who succeeded in outperforming A.I. Oscar acknowledged its “sophisticated” analytical capabilities. One participant, who prefers traditional research methods, says A.I. Oscar brings a “modern edge” to trading. Another, who applied strategic research, was impressed by A.I. Oscar’s integration of both technical and fundamental analysis, calling it a “formidable opponent”.
Humans bullish, machines bearish?
According to the organiser, “emotional biases often influence human traders”. OCBC Securities says the competition revealed that humans are “inherently inclined towards bullish ideas”. “This tendency stems from a combination of market optimism and emotional biases. [The participants] also exhibited a strong sense of camaraderie and collaboration, sharing insights and strategies, which enriched their trading experience.”
Investors’ investment objectives are constantly changing in today’s volatile and uncertain markets, says the brokerage. This largely stems from inflationary pressures, recession talks and geopolitical tensions. “All these will naturally affect an investor’s decision to make certain investment calls, instead of relying on technical analysis and market news to make more informed decisions.”
In fact, A.I. Oscar’s outperformance during the competition period was largely due to its bearish predictions. “We see this as an opportunity for A.I. Oscar and humans to work hand-in-hand to provide the best service for our customers,” says OCBC Securities.
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The brokerage underscores the potential of integrating AI with human expertise to develop “holistic” trading strategies. “A.I. Oscar’s ability to provide unbiased, data-driven insights complements the creative and intuitive strengths of human traders. By leveraging both, traders can achieve a more balanced and comprehensive approach to stock trading.”
If A.I. Oscar is superior to human trading behaviour, how would OCBC Securities make the case for its stock-picker over a robo-investor?
Wilson He, managing director of OCBC Securities, says robo-investors “tend to be more thematic” and do not identify specific stocks, whereas A.I. Oscar allows traders to perform technical analysis with the available numbers and charts. “This allows the traders to have more control and flexibility over their portfolio as compared to robo-investors, where usually one puts in a fixed amount of money every month to a specific fund,” says He.
Could A.I. Oscar one day replace all human traders? He thinks both sides still bring something to the trading floor. “A.I. Oscar runs on algorithms and there will always be a lag time between detecting market signals and producing stock ideas, as it takes time to trawl multiple data points. Human intuition still remains valuable to investors as humans can react instantly when news is out, and [they are] able to make decisions within a split second.”
A.I. Oscar serves as a “good entry point” to explore new stock ideas every week, adds He. “Our trading representatives are still very valuable to our customers, and customers can also rely on our other resources, such as [the iOCBC stock evaluation tool] StockReports+ to make better trading decisions.”
US, Hong Kong names too
OCBC Securities’ customers can now try their hand at using A.I. Oscar themselves, following the launch of the stock-picker in June.
Beyond SGX names, investors can also receive stock recommendations for the US and Hong Kong markets on A.I. Oscar.
The stock-picker is free for OCBC Securities’ customers and available via the iOCBC app, iOCBC online trading platform and email.
Unlike the competitive setting OCBC Securities’ staff went through earlier this year, A.I. Oscar works in tandem with the user; it identifies and predicts market patterns to develop a thorough understanding of an investor’s trading patterns.
Factors such as the individual’s risk appetite, past trading activity and demographic information are used to curate and produce a list of 15 “hyper-personalised” stocks every week.
According to OCBC Securities, this personalisation allows investors to filter stocks that are highly likely to meet their trading preferences and criteria, and to immediately act on the idea by making a trade.
A.I. Oscar was trained with data from over 4,000 stocks listed on SGX, Hong Kong Exchange, Nasdaq, New York Stock Exchange and NYSE American.
According to OCBC Securities, the data includes more than a decade of stock fundamentals, macroeconomic factors, market patterns and technical indicators related to these stocks.
In 2023, 97% of all the trades performed by OCBC Securities customers under 35 were made through digital platforms without the help or advice of a broker. Young investors under 35 opened more than half of all new trading accounts in 2023. OCBC Securities aims to triple the total number of active customers in this segment over the next three years by leveraging A.I. Oscar’s unique proposition.
He says: “Investors already have access to a wide range of information, but the challenge lies in being able to find the information relevant to them, and to distil it into an actionable trading idea. Being able to do so quickly is especially important in today’s fast-paced world.”
A.I. Oscar addresses this need, he adds, and OCBC Securities expects it to become an “indispensable tool” for digitally savvy young investors who prefer the self-service model. “Our trading representatives have found A.I. Oscar to be useful too, as the stock ideas generated can serve as a starting point for discussion between our trading representatives and customers.”
Photos and screengrabs: OCBC Securities
