Alpha Generation through Job Analytics: A Novel Approach to Measuring Tech Adoption

March 15, 2023

New research using RavenPack Job Analytics to quantify tech adoption in hiring posts proves that companies hiring for novel tech skills outperform peers from an investment perspective.

Tech advances shape how companies compete. Success now depends on acquiring and implementing new tech. To innovate and grow, companies seek skilled individuals.

In our most recent study, we leverage RavenPack Job Analytics to quantify technological adoption in hiring posts and determine whether companies that consistently hire individuals with novel technology skills outperform their peers from an investment perspective.

Key Results:

  • A long-only portfolio using novel tech skills as a signal delivers an Information Ratio of 0.9 and Annualized Excess Returns of 2.4% relative to sector, with a near one-month effective holding period (6% Daily Turnover).

  • Alpha remains robust even after controlling for traditional factors.

  • The combination with monthly hiring growth leads to an enhanced portfolio performance with an Information Ratio of 1.2 and Annualized Excess Returns of 3.1%.

0 10 20 30 2016 2014 2018 2020 2022 Cumulative Log Returns (%) Combined Growth Tech Innovation
Figure: Cumulative log-returns for the technology adoption, monthly hiring growth, and combined portfolio for U.S. mid/large-cap companies.

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