Mathematics applied to the markets
Hedge funds are investment funds that have more flexibility than other "classic" investment funds, such as mutual funds, due to their lower exposure to financial regulations.
Among these hedge funds are quantitative funds which, in order to make investment decisions, rely on quantitative analysis techniques that use mathematical and statistical modelling, measurement and research to (try to) predict market behaviour. Their strategies are protean, and it is difficult if not impossible to list them all.
The particularity of quantitative trading lies in the fact that the trading is systematic and most of the time automated. Usually, the strategies developed by these funds are not published and their internal workings can appear obscure. For example, the quantitative fund of the 90s LTCM separated its trades into several parts so that other parts of the market could not replicate their trading strategy as a whole and wanted to keep their quantitative investment methods secret. All this before losing $4.5 billion in 5 weeks in 1998.
Quantitative hedging will use thousands of analyses, such as historical data series and variance and covariance analyses, which are then used for an investment strategy. This data can cover both financial data such as stock price series and economic fundamentals.