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Experiment 6 1

This document outlines an experiment aimed at implementing stock market prediction using Python and machine learning techniques. It details the objectives, materials, procedures for data collection, model implementation, evaluation, and analysis, including the use of Linear Regression, ARIMA, and LSTM models. The experiment emphasizes the importance of model performance metrics and the inherent uncertainties in stock market predictions.

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6 views3 pages

Experiment 6 1

This document outlines an experiment aimed at implementing stock market prediction using Python and machine learning techniques. It details the objectives, materials, procedures for data collection, model implementation, evaluation, and analysis, including the use of Linear Regression, ARIMA, and LSTM models. The experiment emphasizes the importance of model performance metrics and the inherent uncertainties in stock market predictions.

Uploaded by

sya833063
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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EXPERIMENT NO.

:-6

AIM: - To Implement Stock market prediction using python

THEORY:-

Objective:
This experiment aims to introduce to the fundamentals of stock market prediction using machine
learning techniques in Python.
Gather and preprocess historical stock market data.
Implement and train predictive models using various machine learning algorithms (e.g., Linear
Regression, ARIMA, LSTM).
Evaluate model performance using appropriate metrics (e.g., Mean Squared Error, Root Mean
Squared Error, R-squared).
Visualize stock price trends and model predictions.
Understand the limitations and challenges of stock market prediction.

Materials:
Software: Python with the following libraries:
pandas: For data manipulation and analysis.
numpy: For numerical computing.
scikit-learn: For implementing machine learning algorithms.
matplotlib and seaborn: For data visualization.
yfinance: For downloading historical stock data.
statsmodels: For statistical modeling (optional, for ARIMA).
TensorFlow/Keras: For implementing deep learning models (optional, for LSTM).
IDE: Jupyter Notebook or any preferred Python development environment.
Dataset: Historical stock price data for a publicly traded company (e.g., Apple, Google, Amazon)
obtained using the yfinance library.

Procedure:
1. Data Collection and Preprocessing:
Download Data: Use the yfinance library to download historical stock price data (e.g.,
Open, High, Low, Close, Volume) for the chosen company.
Data Cleaning: Handle missing values (if any) using appropriate techniques (e.g.,
imputation).
Feature Engineering:
Create new features based on existing data (e.g., moving averages, momentum,
volatility indicators).
Consider using technical indicators (e.g., MACD, RSI) if applicable.
Data Splitting: Divide the dataset into training and testing sets.
2. Model Implementation and Training:
Linear Regression:
Train a linear regression model to predict future stock prices based on historical
data.
Evaluate model performance using appropriate metrics.
o ARIMA (Autoregressive Integrated Moving Average):
(Optional) Fit an ARIMA model to capture the time series characteristics of the
stock prices.
Evaluate model performance using appropriate metrics.
o LSTM (Long Short-Term Memory) Networks:
(Optional) Implement an LSTM model using TensorFlow/Keras to capture complex
patterns in the stock price data.
Train and evaluate the LSTM model.
3. Model Evaluation:
Calculate Mean Squared Error (MSE), Root Mean Squared Error (RMSE), and R-squared
score to evaluate model performance.
Visualize the actual vs. predicted stock prices to assess model accuracy.
Perform backtesting to evaluate model performance on historical data.
4. Analysis and Discussion:
Compare the performance of different models.
Analyze the limitations and challenges of stock market prediction.
Discuss the importance of risk management and diversification in investment strategies.
Understand that stock market prediction is inherently uncertain and that past performance
is not indicative of future results.

Example Output (Linear Regression):


Python
import yfinance as yf
from sklearn.linear_model import LinearRegression
from sklearn.metrics import mean_squared_error
import matplotlib.pyplot as plt

# Download historical data


data = yf.download("AAPL", start="2010-01-01", end="2023-12-31")

# Prepare data for training


X_train = data[['Open', 'High', 'Low', 'Volume']].values[:-60] # Use past data as
features
y_train = data['Close'].values[:-60]
X_test = data[['Open', 'High', 'Low', 'Volume']].values[-60:]
y_test = data['Close'].values[-60:]

# Train the model


model = LinearRegression()
model.fit(X_train, y_train)

# Make predictions
y_pred = model.predict(X_test)

# Evaluate the model


mse = mean_squared_error(y_test, y_pred)
print(f"Mean Squared Error: {mse}")

# Visualize the results


plt.plot(y_test, label='Actual')
plt.plot(y_pred, label='Predicted')
plt.legend()
plt.show()

Extensions:
 Experiment with different feature engineering techniques.
 Implement more advanced machine learning models (e.g., Random Forest, Support Vector
Regression).
 Incorporate external factors (e.g., news sentiment, economic indicators) into the model.
 Develop a trading strategy based on the model predictions.

RESULT: - Thus, Implemented Stock market prediction using python has been executed successfully.

PRACTICAL ASSIGNMENT:
1. Implement an LSTM (Long Short-Term Memory) network using TensorFlow/Keras to predict stock
prices.?
2. Analyze the impact of different feature combinations on model performance?

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