QuantSC prepares for its first semester

The field of finance had always interested sophomore Rohan Sanjay, but traditional finance and stocks never appealed to him. So when he attended an electronic trading competition during his freshman year and learned about a rising investment trend — quantitative finance, the use of algorithms to predict and invest in market moves — he was immediately drawn in.

However, when he looked for a community at USC where he could learn more and exchange ideas about quant, he came up empty.

That’s when he got the idea to start QuantSC, the University’s first quantitative finance club, where he would create a community dedicated to learning about and investigating quantitative finance. 

“The field of quant, in general, was just so fascinating to me, and I saw myself kind of enjoying a career in the field long-term,” Sanjay said. “So at that point in time, I fully committed to starting to explore it more.”

Reaching out to students Steve Nguyen, Adam von Arnim and Kai Medina, together they founded the club over winter break. This semester will be their first, with Sanjay as president, Steve Nguyen as vice president of community, Adam von Arnim as vice president of projects and Kai Medina as vice president of finance. 

Von Arnim, an applied and computational mathematics and computer science major, has never been especially interested in traditional investing because he feels it is very abstract. However, for von Arnim, quant is different. 

“It’s almost difficult to say that it’s interesting to see a ticker or a symbol of a stock and say ‘Oh wow, this is amazing,’ but thinking about the math behind movements is a little bit more physical,” he said. “For that reason, I enjoy it.”

Quant investing has been around for decades, though it has grown considerably in recent years. A 2019 CNBC article estimates that quant funds now account for 20% of the total money in the stock market, meaning that 20% of the buying and selling is now controlled by algorithms rather than people making individual decisions. 

A typical quant investment technique is known as mean reversion strategy, Nguyen said. He described a typical scenario of a relatively stable stock price that fluctuates between $7 and $9.

“You can identify that price range and then implement a strategy on a platform like QuantConnect where you write it out in code and essentially the algorithm executes trades for you, where it [trades] automatically,” Nguyen said. “You’re buying it at its relative highest and selling at its relative lowest.”

For example, the algorithm could automatically sell the stock at $8.50 and buy it back once the price fell down to $7.30, Nguyen said. This process repeats, and if the algorithm is successful, the investor makes money.

The club looks to help teach members the basics of quant finance, allowing people with varying levels of expertise to join, Nguyen said. For students who come from non-programming backgrounds, the club will hold workshops to provide an introduction to development. 

From there, students will work to create their own algorithms, a process that involves research, reading and testing. 

“It’s very scientific in that you have a hypothesis about the market and how it is going to fluctuate and when the best opportunities are to buy and sell. There’s usually a lot of research papers already out there if you have an idea about something, so you can comb through research papers,” Nguyen said. “From there, you can start writing your own strategy.”

After researching and reading, members can test their algorithms based on historical data, evaluating how well they would have performed during different periods of time. Members are not limited to trading stocks, as they can also develop algorithms for other goods such as trading cards, a trend that has exploded since the beginning of the pandemic, Nguyen said.

Sanjay has considerable experience with quant, starting by building some small algorithms on his own.

“That’s how I got my first taste of algo trading and experimenting with some of my own ideas, really just learning about it and getting my feet wet,” he said.

Starting in July, Sanjay worked at a small quant firm run by a group of undergraduate students, where he continued to gain experience. As a developer, Sanjay said he played a role in building an algorithm from beginning to “production-ready code.”

Nguyen, on the other hand, is fairly new to quant trading — although he has had an interest in stocks since high school, when his older brother would come home from college and explain how the market works to him. 

Once in college himself, Nguyen maintained his interest in stocks while learning more about coding, eventually gravitating toward quant finance as a way he could combine the two fields he was interested in. 

Now, QuantSC is going through applications and preparing to establish a community dedicated to learning about, building and testing algorithms. With varied quant experience of their own, the leaders plan to help others learn, while also furthering their own knowledge of the investing trend. 

“I’m most interested in the community aspect of the club. For the first year at USC, I didn’t see a massive area for mathematically inclined students to really research [quantitative finance],” von Arnim said. “The ability to give an option to math kids and really build out that environment, that was exciting for me.”