Financial X-Rays: Dissect any Price Series with a simple Payoff Diagram


Not many people understand the financial alchemy of modern financial investment vehicles, like hedge funds, that often use sophisticated trading strategies. But everybody understands the meaning of rising and falling markets. Why not simply translate one into the other?

If you want to get your hands on a simple R script that creates an easy-to-understand plot (a profit & loss profile or payoff diagram) out of any price series, read on!
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Understanding Public-Key Cryptography by Mixing Colours!


Public-key cryptography is one of the foundations of our modern digital life. Normally it is quite hard to understand but with our literally colourful explanation it is a walk in the park. At the end we also give the nerd version, so read on!
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Fame: Is Becoming a Star Written in the Stars?


I sometimes joke that as an Aries I don’t believe in zodiac signs. But could there still be some pattern, e.g. in the sense that people born in spring are more prone to success than those born during the winter months?

In this post, we will provide a definitive answer with one of the most fascinating datasets I have ever encountered, so read on!
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The Most Advanced AI in the World explains what AI, Machine Learning, and Deep Learning are!


This is our 101’st blog post here on Learning Machines and we have prepared something very special for you!

Oftentimes the different concepts of data science, namely artificial intelligence (AI), machine learning (ML), and deep learning (DL) are confused… so we asked the most advanced AI in the world, OpenAI GPT-3, to write a guest post for us to provide some clarification on their definitions and how they are related.

We are most delighted to present this very impressive (and only slightly redacted) essay to you – enjoy!
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Learning Statistics: On Hot, Cool, and Large Numbers


My father-in-law used to write down the numbers drawn on the lottery to find patterns, especially whether some numbers were “due” because they hadn’t been drawn for a long time. He is not alone! And don’t they have a point? Shouldn’t the numbers balance after some time? Read on to find out!
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The Solution to my Viral Coin Tossing Poll

Some time ago I conducted a poll on LinkedIn that quickly went viral. I asked which of three different coin tossing sequences were more likely and I received exactly 1,592 votes! Nearly 48,000 people viewed it and more than 80 comments are under the post (you need a LinkedIn account to fully see it here: LinkedIn Coin Tossing Poll).

In this post I will give the solution with some background explanation, so read on!
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Recidivism: Identifying the Most Important Predictors for Re-offending with OneR


In 2018 the renowned scientific journal science broke a story that researchers had re-engineered the commercial criminal risk assessment software COMPAS with a simple logistic regression (Science: The accuracy, fairness, and limits of predicting recidivism).

According to this article, COMPAS uses 137 features, the authors just used two. In this post, I will up the ante by showing you how to achieve similar results using just one simple rule based on only one feature which is found automatically in no-time by the OneR package, so read on!
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Parrondo’s Paradox in Finance: Combine two Losing Investments into a Winner


Wikipedia defines Parrondo’s paradox in game theory as

A combination of losing strategies becomes a winning strategy.

If you want to learn more about this fascinating topic and see an application in finance, read on!
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