Integrative forecasting and analysis of stock price using neural network and ARIMA model

Research Article
Open access

Integrative forecasting and analysis of stock price using neural network and ARIMA model

Jin Li 1*
  • 1 Department of International Education, New Oriental School, Guangzhou, 510000, China    
  • *corresponding author limaxjin@gmail.com
Published on 14 June 2023 | https://doi.org/10.54254/2755-2721/6/20230531
ACE Vol.6
ISSN (Print): 2755-273X
ISSN (Online): 2755-2721
ISBN (Print): 978-1-915371-59-1
ISBN (Online): 978-1-915371-60-7

Abstract

The volatilities of stock prices have a crucial effect on financial decision-making worldwide. With a reliable and accurate forecast model, investors could gain insights into stock price fluctuations and market trends, thus maximizing the opportunity to make profits. In this work, two models were proposed for stock price forecasting. A neural network based on exploiting the abilities of convolutional neural network and bi-directional long short-term memory is proposed and implemented for forecasting the Nasdaq-100 daily closing price. For long-term stock price forecast, we proposed a hybrid model that combined the autoregressive integrated moving average procedure and a neural network layer for modeling the linear and nonlinear features of the Nasdaq Composite monthly closing price. The proposed models produced promising experiment results, indicating the models’ capability of making practical forecasts and analyses based on different data scales and volumes. This work also proposed further considerations of indicators related to the stock price in financial time-series forecasting.

Keywords:

deep learning, CNN, BiLSTM, ARIMA-LSTM, stock price forecasting

Li,J. (2023). Integrative forecasting and analysis of stock price using neural network and ARIMA model. Applied and Computational Engineering,6,969-981.
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References

[1]. Montgomery, D. C., Jennings, C. L., & Kulahci, M. (2015). Introduction to time series analysis and forecasting. John Wiley & Sons.

[2]. Iyiola, O., Munirat, Y., & Nwufo, C. (2012). The modern portfolio theory as an investment decision tool. Journal of Accounting and Taxation, 4(2), 19-28.

[3]. Manuca, R., & Savit, R. (1996). Stationarity and nonstationarity in time series analysis. Physica D: Nonlinear Phenomena, 99(2-3), 134-161.

[4]. Zhong, X., & Enke, D. (2017). Forecasting daily stock market return using dimensionality reduction. Expert Systems with Applications, 67, 126-139.

[5]. Sezer, O. B., Gudelek, M. U., & Ozbayoglu, A. M. (2020). Financial time series forecasting with deep learning: A systematic literature review: 2005-2019. Applied soft computing, 90, 106181.

[6]. Shah, D., Isah, H., & Zulkernine, F. (2019). Stock market analysis: A review and taxonomy of prediction techniques. International Journal of Financial Studies, 7(2), 26.

[7]. Hiransha, M., Gopalakrishnan, E. A., Menon, V. K., & Soman, K. P. (2018). NSE stock market prediction using deep-learning models. Procedia Computer Science, 132, 1351-1362.

[8]. Ariyo, A. A., Adewumi, A. O., & Ayo, C. K. (2014). Stock price prediction using the ARIMA model. In 2014 UKSim-AMSS 16th international conference on computer modelling and simulation, March 26-28, Cambridge, United Kingdom, pp. 106-112.

[9]. Wang, J. J., Wang, J. Z., Zhang, Z. G., & Guo, S. P. (2012). Stock index forecasting based on a hybrid model. Omega, 40(6), 758-766.

[10]. Majumder, M. M. R., & Hossain, M. I. (2019). Limitation of ARIMA in extremely collapsed market: A proposed method. In 2019 International Conference on Electrical, Computer and Communication Engineering, February 07-09, Cox's Bazar, Bangladesh, pp. 1-5.

[11]. Nabipour, M., Nayyeri, P., Jabani, H., Shahab, S., & Mosavi, A. (2020). Predicting stock market trends using machine learning and deep learning algorithms via continuous and binary data; a comparative analysis. IEEE Access, 8, 150199-150212.

[12]. Waqar, M., Dawood, H., Guo, P., Shahnawaz, M. B., & Ghazanfar, M. A. (2017). Prediction of stock market by principal component analysis. In 2017 13th International Conference on Computational Intelligence and Security, December 15-18, Hong Kong, China, pp. 599-602.

[13]. Huang, C. F. (2012). A hybrid stock selection model using genetic algorithms and support vector regression. Applied Soft Computing, 12(2), 807-818.

[14]. Hochreiter, S., & Schmidhuber, J. (1997). Long short-term memory. Neural Computation, 9(8), 1735-1780.

[15]. Selvin, S., Vinayakumar, R., Gopalakrishnan, E. A., Menon, V. K., & Soman, K. P. (2017). Stock price prediction using LSTM, RNN and CNN-sliding window model. In 2017 international conference on advances in computing, communications and informatics, September 13-16, Manipal, India, pp. 1643-1647.

[16]. Lu, W. J., Li, J. Z., Wang, J. Y., & Qin, L. L. (2021). A CNN-BiLSTM-AM method for stock price prediction. Neural Computing and Applications, 33(10), 4741-4753.

[17]. LeCun, Y., Bottou, L., Bengio, Y., & Haffner, P. (1998). Gradient-based learning applied to document recognition. Proceedings of the IEEE, 86(11), 2278-2324.

[18]. Box, G. E., Jenkins, G. M., Reinsel, G. C., & Ljung, G. M. (2015). Time series analysis: forecasting and control. John Wiley & Sons.

[19]. Alam, M. D., & Uddin, G. (2009). Relationship between interest rate and stock price: empirical evidence from developed and developing countries. International Journal of Business and Management, 4(3), 43-51.


Cite this article

Li,J. (2023). Integrative forecasting and analysis of stock price using neural network and ARIMA model. Applied and Computational Engineering,6,969-981.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 3rd International Conference on Signal Processing and Machine Learning

ISBN:978-1-915371-59-1(Print) / 978-1-915371-60-7(Online)
Editor:Omer Burak Istanbullu
Conference website: http://www.confspml.org
Conference date: 25 February 2023
Series: Applied and Computational Engineering
Volume number: Vol.6
ISSN:2755-2721(Print) / 2755-273X(Online)

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References

[1]. Montgomery, D. C., Jennings, C. L., & Kulahci, M. (2015). Introduction to time series analysis and forecasting. John Wiley & Sons.

[2]. Iyiola, O., Munirat, Y., & Nwufo, C. (2012). The modern portfolio theory as an investment decision tool. Journal of Accounting and Taxation, 4(2), 19-28.

[3]. Manuca, R., & Savit, R. (1996). Stationarity and nonstationarity in time series analysis. Physica D: Nonlinear Phenomena, 99(2-3), 134-161.

[4]. Zhong, X., & Enke, D. (2017). Forecasting daily stock market return using dimensionality reduction. Expert Systems with Applications, 67, 126-139.

[5]. Sezer, O. B., Gudelek, M. U., & Ozbayoglu, A. M. (2020). Financial time series forecasting with deep learning: A systematic literature review: 2005-2019. Applied soft computing, 90, 106181.

[6]. Shah, D., Isah, H., & Zulkernine, F. (2019). Stock market analysis: A review and taxonomy of prediction techniques. International Journal of Financial Studies, 7(2), 26.

[7]. Hiransha, M., Gopalakrishnan, E. A., Menon, V. K., & Soman, K. P. (2018). NSE stock market prediction using deep-learning models. Procedia Computer Science, 132, 1351-1362.

[8]. Ariyo, A. A., Adewumi, A. O., & Ayo, C. K. (2014). Stock price prediction using the ARIMA model. In 2014 UKSim-AMSS 16th international conference on computer modelling and simulation, March 26-28, Cambridge, United Kingdom, pp. 106-112.

[9]. Wang, J. J., Wang, J. Z., Zhang, Z. G., & Guo, S. P. (2012). Stock index forecasting based on a hybrid model. Omega, 40(6), 758-766.

[10]. Majumder, M. M. R., & Hossain, M. I. (2019). Limitation of ARIMA in extremely collapsed market: A proposed method. In 2019 International Conference on Electrical, Computer and Communication Engineering, February 07-09, Cox's Bazar, Bangladesh, pp. 1-5.

[11]. Nabipour, M., Nayyeri, P., Jabani, H., Shahab, S., & Mosavi, A. (2020). Predicting stock market trends using machine learning and deep learning algorithms via continuous and binary data; a comparative analysis. IEEE Access, 8, 150199-150212.

[12]. Waqar, M., Dawood, H., Guo, P., Shahnawaz, M. B., & Ghazanfar, M. A. (2017). Prediction of stock market by principal component analysis. In 2017 13th International Conference on Computational Intelligence and Security, December 15-18, Hong Kong, China, pp. 599-602.

[13]. Huang, C. F. (2012). A hybrid stock selection model using genetic algorithms and support vector regression. Applied Soft Computing, 12(2), 807-818.

[14]. Hochreiter, S., & Schmidhuber, J. (1997). Long short-term memory. Neural Computation, 9(8), 1735-1780.

[15]. Selvin, S., Vinayakumar, R., Gopalakrishnan, E. A., Menon, V. K., & Soman, K. P. (2017). Stock price prediction using LSTM, RNN and CNN-sliding window model. In 2017 international conference on advances in computing, communications and informatics, September 13-16, Manipal, India, pp. 1643-1647.

[16]. Lu, W. J., Li, J. Z., Wang, J. Y., & Qin, L. L. (2021). A CNN-BiLSTM-AM method for stock price prediction. Neural Computing and Applications, 33(10), 4741-4753.

[17]. LeCun, Y., Bottou, L., Bengio, Y., & Haffner, P. (1998). Gradient-based learning applied to document recognition. Proceedings of the IEEE, 86(11), 2278-2324.

[18]. Box, G. E., Jenkins, G. M., Reinsel, G. C., & Ljung, G. M. (2015). Time series analysis: forecasting and control. John Wiley & Sons.

[19]. Alam, M. D., & Uddin, G. (2009). Relationship between interest rate and stock price: empirical evidence from developed and developing countries. International Journal of Business and Management, 4(3), 43-51.