Predicting next day direction of stock price movement using machine learning methods with persistent homology: Evidence from Kuala Lumpur Stock Exchange

2020 ◽  
Vol 93 ◽  
pp. 106422 ◽  
Author(s):  
Mohd Sabri Ismail ◽  
Mohd Salmi Md Noorani ◽  
Munira Ismail ◽  
Fatimah Abdul Razak ◽  
Mohd Almie Alias
Author(s):  
V. Serbin ◽  
U. Zhenisserov

Since the stock market is one of the most important areas for investors, stock market price trend prediction is still a hot subject for researchers in both financial and technical fields. Lately, a lot of work has been analyzed and done in the field of machine learning algorithms for analyzing price patterns and predicting stock prices and index changes. Currently, machine-learning methods are receiving a lot of attention for predicting prices in financial markets. The main goal of current research is to improve and develop a system for predicting future prices in financial markets with higher accuracy using machine-learning methods. Precise predicting stock market returns is a very difficult task due to the volatile and non-linear nature of financial stock markets. With the advent of artificial intelligence and machine learning, forecasting methods have become more effective at predicting stock prices. In this article, we looked at the machine learning techniques that have been used to trade stocks to predict price changes before an actual rise or fall in the stock price occurs. In particular, the article discusses in detail the use of support vector machines, linear regression, and prediction using decision stumps, classification using the nearest neighbor algorithm, and the advantages and disadvantages of each method. The paper introduces parameters and variables that can be used to recognize stock price patterns that might be useful in future stock forecasting, and how the boost can be combined with other learning algorithms to improve the accuracy of such forecasting systems.


Bongard problems are a set of 100 visual puzzles posed by M. M. Bongard, where each puzzle consists of twelve images separated into two groups of six images. The task is to find the unique rule separating the two classes in each given problem. The problems were first posed as a challenge for the AI community to test machines ability to imitate complex, context-depending thinking processes using only minimal information. Although some work was done to solve these problems, none of the previous approaches could automatically solve all of them. The present paper is a contribution to attack these problems with a different approach, combining the tools of persistent homology alongside with machine learning methods. In this work, we present an algorithm and show that it is able to solve problems involving differences in connectivity and size as examples, we also show that it can solve problems involving a much larger set of differences provided the right G-equivariant operators


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