Alpha-R1: Alpha Screening with LLM Reasoning via Reinforcement Learning
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| Main Authors: | , , , , , , , , |
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| Format: | Preprint |
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2025
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| _version_ | 1866909977767051264 |
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| author | Jiang, Zuoyou Zhao, Li Sun, Rui Sun, Ruohan Li, Zhongjian Li, Jing Jiang, Daxin Bai, Zuo Hua, Cheng |
| author_facet | Jiang, Zuoyou Zhao, Li Sun, Rui Sun, Ruohan Li, Zhongjian Li, Jing Jiang, Daxin Bai, Zuo Hua, Cheng |
| contents | Signal decay and regime shifts pose recurring challenges for data-driven investment strategies in non-stationary markets. Conventional time-series and machine learning approaches, which rely primarily on historical correlations, often struggle to generalize when the economic environment changes. While large language models (LLMs) offer strong capabilities for processing unstructured information, their potential to support quantitative factor screening through explicit economic reasoning remains underexplored. Existing factor-based methods typically reduce alphas to numerical time series, overlooking the semantic rationale that determines when a factor is economically relevant. We propose Alpha-R1, an 8B-parameter reasoning model trained via reinforcement learning for context-aware alpha screening. Alpha-R1 reasons over factor logic and real-time news to evaluate alpha relevance under changing market conditions, selectively activating or deactivating factors based on contextual consistency. Empirical results across multiple asset pools show that Alpha-R1 consistently outperforms benchmark strategies and exhibits improved robustness to alpha decay. The full implementation and resources are available at https://github.com/FinStep-AI/Alpha-R1. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2512_23515 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Alpha-R1: Alpha Screening with LLM Reasoning via Reinforcement Learning Jiang, Zuoyou Zhao, Li Sun, Rui Sun, Ruohan Li, Zhongjian Li, Jing Jiang, Daxin Bai, Zuo Hua, Cheng Trading and Market Microstructure Artificial Intelligence Computational Engineering, Finance, and Science Machine Learning Signal decay and regime shifts pose recurring challenges for data-driven investment strategies in non-stationary markets. Conventional time-series and machine learning approaches, which rely primarily on historical correlations, often struggle to generalize when the economic environment changes. While large language models (LLMs) offer strong capabilities for processing unstructured information, their potential to support quantitative factor screening through explicit economic reasoning remains underexplored. Existing factor-based methods typically reduce alphas to numerical time series, overlooking the semantic rationale that determines when a factor is economically relevant. We propose Alpha-R1, an 8B-parameter reasoning model trained via reinforcement learning for context-aware alpha screening. Alpha-R1 reasons over factor logic and real-time news to evaluate alpha relevance under changing market conditions, selectively activating or deactivating factors based on contextual consistency. Empirical results across multiple asset pools show that Alpha-R1 consistently outperforms benchmark strategies and exhibits improved robustness to alpha decay. The full implementation and resources are available at https://github.com/FinStep-AI/Alpha-R1. |
| title | Alpha-R1: Alpha Screening with LLM Reasoning via Reinforcement Learning |
| topic | Trading and Market Microstructure Artificial Intelligence Computational Engineering, Finance, and Science Machine Learning |
| url | https://arxiv.org/abs/2512.23515 |