Asahi Glass develops 'crystal ball' for stock prices

Individual investors have long been searching for that "crystal ball" system which can give them an edge in the markets by helping them pick the right stock at the right time.

Japan's Asahi Glass Co claims to have developed just such a system, saying it scientifically forecasts the movement of stock prices, and has started offering it for purchase via the Internet.The glassmaker says it developed the system, dubbed "RAIT" (for return analytic indication tool), by utilizing its know-how in glass-melting technology.Company officials are first to admit that stock price movements projected by the system "are not always 100% accurate, as an unforeseen incident or accident can causes wild fluctuations in stock prices."They add, however, "The system has been well received by investors who have used it on a trial basis."At first glance, stock-price prediction might seem far removed from the business of making glass.But there is common ground in crunching numbers, and in that area, glassmakers are no slouches.

To turn out quality products, glass manufacturers have to make pressure, temperature and other measurements of glass-melting furnaces by using hundreds of sensors, and collect and analyze that vast amount of constantly changing data to simulate the flow of melting glass within furnaces.

Asahi Glass says it applied such technique and technology to develop the stock-price forecasting system.

While the specifics could well turn most people glassy-eyed, the system essentially breaks down into two parts.

First, it obtains a theoretical wave form of the price fluctuations of a stock by analyzing the stock's actual price movement.

It then adjusts that theoretical wave form by referring to a database of deviations of theoretical wave forms from the wave forms of the stock's actual closing prices over the previous 10 years.

The company claims the system can forecast not only the upward and downward directions but also the turning points of price movements of the nearly 1,500 shares listed on the First Section of the Tokyo Stock Exchange.

Asahi Glass started offering the system this month via the Internet to individual investors at a monthly fee of 3,000 yen.

The company is next eyeing development of a similar system for currency exchange transactions, aiming to achieve annual sales of 500 million yen in its financial services business.

Asahi Glass, however, has actually followed a path blazed by steelmakers into the financial-sector arena.

Steelmakers have already provided various systems to financial institutions by capitalizing on their own experience in advanced IT capabilities that they cultivated via around-the-clock operations of blast furnaces and the temperature controls of rolling mills by computer.

Since the numerical expressions used for the production of financial derivatives and those used for steel production can be similar, steelmakers have many technologies that can be applied to financial service systems.

NS Solutions Corp, an affiliate of Nippon Steel Corp, has built a reputation for its risk management systems.

Nippon Steel Corp itself branched into the development of systems for use by financial institutions in the late 1990s.

Keio University Professor Takahiko Tanahashi, who collaborated in the development of Asahi Glass' RAIT, says technologies to manufacture products by controlling the flow of materials, such as those used by steelmakers and glassmakers, are easily applicable to the development of financial service systems.

"If university laboratories properly act as a go-between, the application of manufacturers' technologies to financial services will just keep making further progress," Takahashi said.

600450 Asahi Glass develops 'crystal ball' for stock prices
Date: 21 October 2003

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