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Exploration of stock index change prediction model based on the combination of principal component analysis and artificial neural network

  • Jiasheng CaoEmail author
  • Jinghan Wang
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  • 28 Downloads

Abstract

In order to establish an accurate effective stock forecasting model, the principal component analysis (PCA) was first used to analyze the main financial index data of some listed companies and the comprehensive score of evaluation index was obtained in this study. Then, the financial indicator data and the transaction indicator data were simultaneously used as the input variables of the stock price prediction research, three back propagation (BP) neural network algorithms were used for experiment, and its prediction situation was compared. Results show that the BP neural network based on Bayesian regularization algorithm has the highest prediction accuracy and can avoid over-fitting phenomenon in the training process of the model; the error between the predicted value and the actual value is small. Finally, this study constructed a stock price prediction study based on PCA and BP neural network algorithm as well as an investment stock selection strategy based on traditional stock selection analysis method. As a result, the proposed model is proved to be effective.

Keywords

Stock price forecasting Investment guidance Principal component analysis Bayesian regularization algorithm BP neural network 

Notes

Compliance with ethical standards

Conflict of interest

All authors declare that they have no conflict of interest.

Ethical approval

This article does not contain any studies with human participants or animals performed by any of the authors.

Informed consent

Informed consent was obtained from all individual participants included in the study.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.University of Science and Technology of ChinaHefeiChina
  2. 2.Illinois Institute of TechnologyChicagoUSA

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