What is a Quantitative Analyst?

The Quantitative Analyst, or “Quant”, works in the financial field and aims to reduce risk, while generating profits.They do this by developing and implementing complex mathematical and computer models which help to predict, among other things, changes in markets, potential market risks and pricing.

Quantitative Analysts require strong analytical and mathematical skills, as well as an ability to work independently. They employ logic and complex mathematical and programming tools to calculate abstract financial problems. This allows them to make key financial decisions, often in high-pressure situations. The Quant requires a high level of concentration, patience and determination, as well as an ability to manage stress.

The Quant works with all stakeholders to pinpoint business requirements and projected outcomes. They model business scenarios in collaboration with business analysts, subject matter experts and the like, making use of vetted sources of information to solve client analytics problems. A Quant makes use of experimental design approaches to validate findings or test theories. They will often employ algorithmic data analysis to discover patterns, which can form the basis of their market predictions, always striving to keep their analysis as accurate as possible. They are also required to present their findings in a way that is easily understood, which allows a business to take action based on the Quant’s recommendations.

Quantitative Analysts sometimes work directly with traders, developing pricing or trading tools and providing them to the traders. They are also required to validate the models, conduct research, and come up with new trading strategies, or make predictions which contribute to risk management scenarios.

Quantitative Analysts work in major financial centres, usually with trading operations. They are generally based in large cities with financial hubs. It is a high-pressure job, with very long hours and a high level of culpability. The Quant’s models and predictions inform trade decisions, and this can mean the success or failure of many a venture. Because it is such a high-pressure job, it is also a high-paying one. Salaries range from R25 000p/m to as much as R100 000p/m.

The aspiring Quantitative Analyst can study any of the following degrees:

MSc Physics
MSc Statistics
MSc Applied Mathematics
MSc Industrial Mathematics
MSc Operational Research
MSc Engineering
MSc Numerical Mathematics
MSc Financial Mathematics

These degrees aim to develop scientific, mathematical and computer competencies.

You will learn advanced Mathematical and Modelling skills, Calculus (including differential, integral and stochastic), Numerical Linear Algebra (NLA), Game Theory and probability and statistics.

You will need to understand various programming languages, such as Java, Python and C++/C#, programs such as MatLab, SAS, S-PLUS/R and Excel, and distributed computing like Spark. You will also learn skills in big data modelling, machine learning, data mining and pattern recognition, as well as cloud data storage and computing.

In the field of Finance, you will require knowledge of financial modelling, portfolio theory, credit risk and credit risk products, equity & interest rate derivatives and systematic and discretionary trading practices.

This article was first published on Quantify Your Future.

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