China unveils first AI model to gauge weather’s impact on stock...

Key Highlights

• Zhao Yanxia, a lead developer of the model and director of the CMA key open laboratory for financial meteorology, said the model, utilizing global reanalyzed meteorological data and historical stock trading data, is able to forecast short-term returns for the majority of stocks on China’s A-share market.
• Validation tests indicate that the model is capable of accurately identifying industries highly sensitive to weather conditions, such as wind and solar power, traditional petrochemicals, construction and agriculture, thereby aligning with international standards.
• Back-testing of investment strategies based on the model’s predictions has shown “sustained and stable positive returns” over various historical periods, suggesting practical potential, Zhao explained.
• The model holds broad application prospects in the financial sector, said Li Hao, a professor at the Artificial Intelligence Innovation and Incubation Institute of Fudan University and one of the model’s creators.
• Companies in weather-sensitive industries can use it for climate risk management, while banks and insurers can apply it to control risks in businesses, like equity pledges, and explore climate-related financing, Li noted.