# Articles by Learning Machines

### How to Catch a Thief: Unmasking Madoff’s Ponzi Scheme with Benford’s Law

November 17, 2020 |

One of my starting points into quantitive finance was Bernie Madoff’s fund. Back then because Bernie was in desperate need of money to keep his Ponzi scheme running there existed several so-called feeder funds. One of them happened to approach me to offer me a once in a lifetime ... [Read more...]

### Create Bart Simpson Blackboard Memes with R

November 10, 2020 |

Everybody knows the Simpsons, everybody loves the Simpsons and everybody can laugh about Bart Simpson writing funny lines on the blackboard! If you want to create your own Bart Simpson Blackboard Meme Generator with R read on! Conveniently enough there is a package for creating memes already (who would have ... [Read more...]

### Financial Engineering: Static Replication of any Payoff Function

November 3, 2020 |

In the area of option strategy trading, it has always been a dream of mine to have a universal tool that is able to replicate any payoff function statically by combining plain vanilla products like calls, puts, and zerobonds. Many years ago there was such a tool online but it ... [Read more...]

### Financial Engineering: Static Replication of any Payoff Function

November 3, 2020 |

In the area of option strategy trading, it has always been a dream of mine to have a universal tool that is able to replicate any payoff function statically by combining plain vanilla products like calls, puts, and zerobonds. Many years ago there was such a tool online but it ... [Read more...]

### The Central Limit Theorem (CLT): From Perfect Symmetry to the Normal Distribution

October 27, 2020 |

How can the Normal Distribution arise out of a completely symmetric set-up? The so-called Central Limit Theorem (CLT) is a fascinating example that demonstrates such behaviour. If you want to get some intuition on what lies at the core of many statistical tests, read on! The Central Limit Theorem (CLT) ... [Read more...]

### “You Are Here”: Understanding How GPS Works

October 20, 2020 |

Last week, I showed you a method of how to find the fastest path from A to B: Finding the shortest Path with Dijkstra’s Agorithm. To make use of that, we need a method to determine our position at any point in time. For that matter, many devices use ... [Read more...]

### Finding the Shortest Path with Dijkstra’s Algorithm

October 13, 2020 |

I have to make a confession: when it comes to my sense of orientation I am a total failure… sometimes it feels like GPS and Google maps were actually invented for me! Well, nowadays anybody uses those practical little helpers. But how do they actually manage to find the shortest ... [Read more...]

### 3.84 or: How to Detect BS (Fast)

October 6, 2020 |

In From Coin Tosses to p-Hacking: Make Statistics Significant Again! I explained the general principles behind statistical testing, here I will give you a simple method that you could use for quick calculations to check whether something fishy is going on (i.e. a fast statistical BS detector), so read ... [Read more...]

### Network Analysis: Who is the Most Important Influencer?

July 28, 2020 |

Networks are everywhere: traffic infrastructure and the internet come to mind, but networks are also in nature: food chains, protein-interaction networks, genetic interaction networks and of course neural networks which are being modelled by Artificial Neural Networks. In this post, we will create a small network (also called graph mathematically) ... [Read more...]

### Local Differential Privacy: Getting Honest Answers on Embarrassing Questions

July 21, 2020 |

Do you cheat on your partner? Do you take drugs? Are you gay? Are you an atheist? Did you have an abortion? Will you vote for the right-wing candidate? Not all people feel comfortable answering those kinds of questions in every situation honestly. So, is there a method to find ... [Read more...]

### Doing Maths Symbolically: R as a Computer Algebra System (CAS)

July 14, 2020 |

When I first saw the Computer Algebra System Mathematica in the nineties I was instantly fascinated by it: you could not just calculate things with it but solve equations, simplify, differentiate and integrate expressions and even solve simple differential equations… not just numerically but symbolically! It helped me a lot ... [Read more...]

### Kalman Filter as a Form of Bayesian Updating

July 7, 2020 |

The Kalman filter is a very powerful algorithm to optimally include uncertain information from a dynamically changing system to come up with the best educated guess about the current state of the system. Applications include (car) navigation and stock forecasting. If you want to understand how a Kalman filter works ... [Read more...]

### Time Series Analysis: Forecasting Sales Data with Autoregressive (AR) Models

June 30, 2020 |

Forecasting the future has always been one of man’s biggest desires and many approaches have been tried over the centuries. In this post we will look at a simple statistical method for time series analysis, called AR for Autoregressive Model. We will use this method to predict future sales ... [Read more...]

### COVID-19: False Positive Alarm

June 23, 2020 |

In this post, we are going to replicate an analysis from the current issue of Scientific American about a common mathematical pitfall of Coronavirus antibody tests with R. Many people think that when they get a positive result of such a test they are immune to the virus with high ... [Read more...]

### Thomas Ramge: Postdigital (Book Excerpt)

June 16, 2020 |

We are honoured to present to you an exclusive excerpt from digital thought leader and bestselling author Thomas Ramge’s new book Postdigital. Using AI to Fight Coronavirus, Foster Wealth and Fuel Democracy: In concrete terms, what would a postdigital world look like in which people — both individually and as ... [Read more...]

### Learning Data Science: A/B Testing in Under One Minute

June 9, 2020 |

Google does it! Facebook does it! Amazon does it for sure! Especially in the areas of web design and online advertising, everybody is talking about A/B testing. If you quickly want to understand what it is and how you can do it with R, read on! The basic idea ... [Read more...]

### Learning R: Build a Password Generator

June 2, 2020 |

It is not easy to create secure passwords. The best way is to let a computer do it by randomly combining lower- and upper-case letters, digits and other printable characters. If you want to learn how to write a small function to achieve that read on! The exact task is ... [Read more...]

### Learning Statistics: Randomness is a Strange Beast

May 26, 2020 |

Our intuition concerning randomness is, strangely enough, quite limited. While we expect it to behave in certain ways (which it doesn’t) it shows some regularities that have unexpected consequences. In a series of seemingly random posts, I will highlight some of those regularities as well as consequences. If you ... [Read more...]

### Lying with Statistics: One Beer a Day will Kill you!

May 19, 2020 |

About two years ago the renowned medical journal “The Lancet” came out with the rather sensational conclusion that there is no safe level of alcohol consumption, so every little hurts! For example, drinking a bottle of beer per day (half a litre) would increase your risk of developing a serious ... [Read more...]

### Will AI become conscious any time soon?

May 12, 2020 |

We all know the classical Sci-Fi trope of intelligent machines becoming conscious and all the potential ramifications that could follow from there (free will, fighting their human creators, ethical dilemmas and so forth). Now, is this a realistic scenario? As a researcher in the area of AI (see e.g. ... [Read more...]
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