I would like to quickly be able to look for stocks that relate to each other in some other way than being in the same industry. It is very easy to find similar stocks in the same sector but during special circumstances such as when news comes out on an issue in the middle of the day there are other, sometimes better and "safer" plays that are not as apparent. For example on the day Healthsouth was halted (halted around 3.40 and opened at about 14cents) there was a REIT (symbol HR)which earned 25% of its revenue from HRC leases, the stock never squeezed and went down 4pts. What kind of resources are available to find these relationships quickly? Please dont just say "do your research" No one can know and remember the tens of thousands of these kind of relationships that must exist---but if I know what kind of relationship I may be looking for I would like to find a place to begin looking. thanks
I think the people who "know these stocks" can drive the prices down/up quicker than I would think any resource could help you find them. Think about all the people who know: The leasing agents at the REIT The analysts who have gone through every document at the REIT and UN The property management people at UN The fund managers who are responsible for HR and UN in their particular funds. You've got a LOT of experts you're competing with. But, I would love to have a resource for that as well, so I wish you luck with your quest. Cash
If you subscribe to market topology you can plug in any stock that makes a move and immediately get the stocks with the highest correlations and flag them for potential moves or buy/short them on the expectation that they go. Any stock that makes a huge intraday move or even premarket should be immediately checked for correlations. This is where a huge amount of money can be made, and the lags are greater than you would think.
If you have the money....this is also worth looking into: Data Trove for the Sector Trader Peter Chapman The Platform for Keeping Tabs on Company Products A new market data service is capitalizing on the movement towards sector-based trading on Wall Street. San Francisco-based Sector Data sells a service that allows traders to quickly access detailed information about publicly traded listed and Nasdaq companies. It includes information about the competitors, suppliers and customers of these companies. From broad industry categorizations, traders can drill down to the product level of nearly 3,700 companies in the healthcare, media, technology and financial services industries. On its surface, the product, SectorEngine, is a standard market data offering, which provides quotes, news and charts. Click on a stock symbol, though, and a window opens up onto a dense trove of company data. That repository is called SectorBase, a high-end equity research platform underpinned by a patented classification system constructed by two frustrated West Coast portfolio managers. The money managers found it difficult to analyze similar companies in such high-growth areas as healthcare and technology because of the inadequacies of government and private classification systems. So, they built their own hierarchy. The core unit of the hierarchy is the product. SectorBase is broken down into 70,000 trade names in 16,000 product groups. "You really can't get an accurate view of the breakout potential of a company unless you understand the products and services," said Kevin O'Brien, Sector Data's chief operating officer. "So, rather than lumping companies into broad classification systems, these guys did the opposite. They went all the way down to the product level." The standard government classification system is the Census Bureau's NAICS, or North American Industry Classification System. O'Brien says the system is accurate in its categorizing of old line industries such as railroads, but is "deplorable" when it comes to the fast-changing high-growth sectors. Sector Data offers industry information on 9,000 North American companies. The approximately 5,300 companies that it doesn't classify are listed according to the NAICS hierarchy. Sector Data was founded in 1998. Its original plan was to market SectorBase to investment departments as a research tool. In 2001, though, it launched SectorEngine and aggressively pursued trading desks. Its first customer for SectorEngine was Preferred Trade, a San Francisco brokerage owned by Sector Data's chairman and chief executive. "The fastest penetration of the past three to six months has been on the trading floor," said O'Brien, "or with smaller institutions that want a quick view of the market during trading hours." Traders want an edge, adds O'Brien. They want more insight into a company. SectorData has inked deals with the Pacific Exchange, First Options, and its sister company Spear, Leeds & Kellogg. The firm has also entered into partnerships with brokers offering direct access technology such as LaBranche Financial Services, Interactive Brokers and Preferred Trade. It is in talks with many of Wall Street's big trading shops, according to O'Brien. To a large degree, Sector Data's new emphasis on trading floors is due to the enthusiasm for the product by its largest backer, chairman and chief executive Mike Engmann. Engmann, 52, a major options trading force on the West Coast since the 1970s, was originally a passive investor in Sector Data. Together with his brother Doug Engmann, president of ABN Amro Sage, Mike Engmann took ownership control of the company in 2001. "He's also our biggest user," O'Brien said. "He still manages a lot of his own money." Mike Engmann's Preferred Trade, one of several companies he controls, caters primarily to active options traders. Engmann founded Preferred in 1980 after a four-year stint as an options market maker at the Pacific Exchange. Preferred Trade is now a member of the New York Stock Exchange, where it executes equity hedges and layoffs for options traders. Doug Engmann was also an options market maker before joining the Pacific Exchange as an executive. He formed Sage Clearing in 1982 to clear for options traders, later selling the firm to ABN Amro. O'Brien signed on in 2002. He was previously an executive with Reuters' venture capital unit Greenhouse Fund. His group sunk a few million dollars into Sector Data along with other venture capitalists, allowing it to get off the ground. Joining with O'Brien in 2002 was fellow Reuters' exec John Tucker. The changes at the top of the firm speak to the problems the founders had in running the business. Sector Data hopes to capitalize on the trend among money managers and brokerages of assigning trader responsibility for entire industry sectors. Rather than trade a hodgepodge of names across industry sectors, traders are specializing in single sectors. The practice got its start in the trading rooms of large fund managers, gravitated to the large brokerages and is now spreading industry wide. It promotes efficiency and communication within equity departments, putting traders on the same page as their analysts and trading counterparties. In addition, due to the elimination of the sixteenth as the basic trading increment, spreads have collapsed and sellside traders' guaranteed profits have vanished. It is becoming almost mandatory for market makers to grasp the fundamentals of the stocks they trade if they wish to make a profit and provide value to the buyside. By and large, the movement to sector-based trading is occurring within the confines of the Nasdaq or listed environments. Individual traders still either handle listed or Nasdaq stocks. They do not trade both. Sector Data does not perceive that as a problem. That's because 2,575, or 70 percent, of the 3,674 companies it tracks are traded over the counter. The firm is betting traders responsible for entire industries will welcome tools that make their research more efficient. SectorEngine can be used in two ways: either proactively or reactively. Breaking News If news breaks that moves a company's stock price, the trader can quickly delve into SectorBase to determine if any of the company's competitors, customers or suppliers are likely to be affected. If their stock prices have not yet moved, there may be time for the trader to take on a defensive or offensive position in the name. Such "comp" or comparable analysis is a key feature of the service. Because the founders of Sector Data dug deep for product-specific data they were able to link companies together by products and markets. Traders not satisfied with just reacting to news can use Sector Data to generate ideas, explained O'Brien. "A colleague calls up and says memory chips are interesting," he said. "In two to three minutes you can get up to speed on memory chips." Copyright 2003 Thomson Media Inc. All Rights Reserved.