Alpha-R1: Alpha Screening with LLM Reasoning via Reinforcement Learning

Zuoyou Jiang, Li Zhao, Rui Sun, Ruohan Sun, Zhongjian Li, Jing Li, Daxin Jiang, Zuo Bai and Cheng Hua

Papers from arXiv.org

Abstract: 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.

Date: 2025-12
New Economics Papers: this item is included in nep-ain, nep-big and nep-ets
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2512.23515 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2512.23515

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().