Comparative analysis of machine learning and deep learning techniques for prediction of the stock market

Research Article
Open access

Comparative analysis of machine learning and deep learning techniques for prediction of the stock market

Xuyang Zheng 1*
  • 1 Nanjing University of Posts and Telecommunications    
  • *corresponding author b20032225@njupt.edu.cn
Published on 23 October 2023 | https://doi.org/10.54254/2755-2721/17/20230926
ACE Vol.17
ISSN (Print): 2755-273X
ISSN (Online): 2755-2721
ISBN (Print): 978-1-83558-025-7
ISBN (Online): 978-1-83558-026-4

Abstract

In recent years, there has been a continuing search for reliable instruments that can predict trends in financial markets and activities related to investments. In the past, academics have used traditional methods to forecast the investment worth of equities by analyzing metrics such as the financial records of companies from both a fundamental and technical point of view. The effectiveness of these strategies could decrease as market information asymmetry continues to rise and high-frequency trading becomes increasingly prevalent. Researchers have developed novel methodologies as a result of the progress that has been made in the field of artificial intelligence technology. One of these methodologies is the application of neural networks for forecasting. In the meantime, data visualization is becoming increasingly common, which could make it easier to conduct an in-depth analysis of the advantages and disadvantages presented by various models. The purpose of this research is to evaluate the performance of machine learning and deep learning strategies, including logistic regression, support vector machine, multi-layer perceptron and convolution neural networks, in forecasting stock market prices where various data visualization techniques are utilized for investigation. The findings from error analysis demonstrate that convolutional neural networks operate superbly.

Keywords:

market prediction, machine learning, neural networks, data visualization

Zheng,X. (2023). Comparative analysis of machine learning and deep learning techniques for prediction of the stock market. Applied and Computational Engineering,17,139-149.
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References

[1]. Nan W 2015 A comparison of several statistical inference methods for VaR (Guangxi: Guangxi Normal University).

[2]. Guru B K and Yadav I S 2019 Financial development and economic growth: panel evidence from BRICS Journal of Economics, Finance and Administrative Science vol 24 p 113-26.

[3]. Bustos O and Pomares-Quimbaya 2020 Stock market movement forecast: A systematic review Expert Systems with Applications vol 156 p 113464.

[4]. Y Lecun, L Bottou, Y Bengio and P Haffner 1998 Gradient-based learning applied to document recognition Proceedings of the IEEE vol 86.11 p 2278-324.

[5]. Yang C, Zhai J and Tao G 2020 Deep Learning for Price Movement Prediction Using Convolutional Neural Network and Long Short-Term Memory Mathematical Problems in Engineering vol 2020 p 1-13.

[6]. Mehtab S and Sen J 2020 Stock price prediction using convolutional neural networks on a multivariate timeseries.

[7]. Henrique B M, Sobreiro V A and Kimura H 2018 Stock price prediction using support vector regression on daily and up to the minute prices The Journal of Finance and Data Science vol 4.3 p 183-201.

[8]. Saeed M, Ahmad I and Usman M A 2021 Do the stocks’ returns and volatility matter under the COVID-19 pandemic? A Case Study of Pakistan Stock Exchange iRASD Journal of Economics vol 3.1 p 13-26.

[9]. Hoseinzade E and Haratizadeh S 2019 CNNpred: CNN-based stock market prediction using a diverse set of variables Expert Systems with Applications vol 12 p 273-85.

[10]. Wright R E 1995 Logistic regression pp 217–244.

[11]. Cortes C and Vapnik V 1995 Support-vector networks Machine learning vol 20 pp 273-97.

[12]. Rumelhart D E, Hinton G E and Williams R J 1986 Learning representations by back-propagating errors nature Nature vol 323.6088 pp 533-536.

[13]. McClelland J L, Rumelhart D E and PDP Research Group 1987 Psychological and Biological Models vol 2.

[14]. Nti I K, Adekoya A F and Weyori B A 2020 A comprehensive evaluation of ensemble learning for stock-market prediction Journal of Big Data vol 7.1 p 1-40.

[15]. Ruibo W 2019 Research on regularized cross-validation method for prediction performance comparison of supervised learning algorithms.

[16]. Hyun Sik Sim, Hae In Kim and Jae Joon Ahn 2019 Is Deep Learning for Image Recognition Applicable to Stock Market Prediction? Complexity vol 2019.

[17]. Goodfellow I, Bengio Y and Courville A 2016 Deep learning Nature vol 521.7553 p 436-44.

[18]. Smith L N 2018 A disciplined approach to neural network hyper-parameters: Part 1--learning rate, batch size, momentum, and weight decay ArXiv Preprints vol 1803.09820.

[19]. Smith S L, Kindermans P J, Ying C and Le V Q 2017 Don't decay the learning rate, increase the batch size ArXiv Preprint vol 1711.00489.


Cite this article

Zheng,X. (2023). Comparative analysis of machine learning and deep learning techniques for prediction of the stock market. Applied and Computational Engineering,17,139-149.

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 5th International Conference on Computing and Data Science

ISBN:978-1-83558-025-7(Print) / 978-1-83558-026-4(Online)
Editor:Roman Bauer, Marwan Omar, Alan Wang
Conference website: https://2023.confcds.org/
Conference date: 14 July 2023
Series: Applied and Computational Engineering
Volume number: Vol.17
ISSN:2755-2721(Print) / 2755-273X(Online)

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References

[1]. Nan W 2015 A comparison of several statistical inference methods for VaR (Guangxi: Guangxi Normal University).

[2]. Guru B K and Yadav I S 2019 Financial development and economic growth: panel evidence from BRICS Journal of Economics, Finance and Administrative Science vol 24 p 113-26.

[3]. Bustos O and Pomares-Quimbaya 2020 Stock market movement forecast: A systematic review Expert Systems with Applications vol 156 p 113464.

[4]. Y Lecun, L Bottou, Y Bengio and P Haffner 1998 Gradient-based learning applied to document recognition Proceedings of the IEEE vol 86.11 p 2278-324.

[5]. Yang C, Zhai J and Tao G 2020 Deep Learning for Price Movement Prediction Using Convolutional Neural Network and Long Short-Term Memory Mathematical Problems in Engineering vol 2020 p 1-13.

[6]. Mehtab S and Sen J 2020 Stock price prediction using convolutional neural networks on a multivariate timeseries.

[7]. Henrique B M, Sobreiro V A and Kimura H 2018 Stock price prediction using support vector regression on daily and up to the minute prices The Journal of Finance and Data Science vol 4.3 p 183-201.

[8]. Saeed M, Ahmad I and Usman M A 2021 Do the stocks’ returns and volatility matter under the COVID-19 pandemic? A Case Study of Pakistan Stock Exchange iRASD Journal of Economics vol 3.1 p 13-26.

[9]. Hoseinzade E and Haratizadeh S 2019 CNNpred: CNN-based stock market prediction using a diverse set of variables Expert Systems with Applications vol 12 p 273-85.

[10]. Wright R E 1995 Logistic regression pp 217–244.

[11]. Cortes C and Vapnik V 1995 Support-vector networks Machine learning vol 20 pp 273-97.

[12]. Rumelhart D E, Hinton G E and Williams R J 1986 Learning representations by back-propagating errors nature Nature vol 323.6088 pp 533-536.

[13]. McClelland J L, Rumelhart D E and PDP Research Group 1987 Psychological and Biological Models vol 2.

[14]. Nti I K, Adekoya A F and Weyori B A 2020 A comprehensive evaluation of ensemble learning for stock-market prediction Journal of Big Data vol 7.1 p 1-40.

[15]. Ruibo W 2019 Research on regularized cross-validation method for prediction performance comparison of supervised learning algorithms.

[16]. Hyun Sik Sim, Hae In Kim and Jae Joon Ahn 2019 Is Deep Learning for Image Recognition Applicable to Stock Market Prediction? Complexity vol 2019.

[17]. Goodfellow I, Bengio Y and Courville A 2016 Deep learning Nature vol 521.7553 p 436-44.

[18]. Smith L N 2018 A disciplined approach to neural network hyper-parameters: Part 1--learning rate, batch size, momentum, and weight decay ArXiv Preprints vol 1803.09820.

[19]. Smith S L, Kindermans P J, Ying C and Le V Q 2017 Don't decay the learning rate, increase the batch size ArXiv Preprint vol 1711.00489.