PRESENTATION BY:
OFEI VICTORIA OMIME
FPS/CSC/20/68415
SEMINAL TOPIC:
STOCK PRICE PREDICTION
USING RECURRENT NEURAL
NETWORK.
INTRODUCTION
WHAT IS STOCK PRICE PREDICTION USING RECURRENT NEURAL
NETWORK
STOCK PRICE PREDICTION IS SIMPLY DEFINE AS THE PREDICTION
OF FINANCIAL VALUES OF FUTURE ASSET.
THE FINANCIAL MARKETS ARE INHERENTLY COMPLEX AND INFLUENCED BY
A MYRIAD OF FACTORS, MAKING ACCURATE STOCK PRICE PREDICTION A
FORMIDABLE CHALLENGE. INVESTORS AND TRADERS CONSTANTLY SEEK
METHODOLOGIES THAT CAN ENHANCE PREDICTION ACCURACY TO INFORM
DECISION-MAKING AND OPTIMIZE RETURNS.
METHODOLOGY
The methodology includes data Collection - Stock prices, including open, high, low, and
close (OHLC) prices, trading volume, and technical indicators such as moving averages
and relative strength index (RSI), are collected.
In pre-processing data, normalization is performed to scale values between 0 and 1, which
helps improve model convergence during training. Various RNN architectures, including
vanilla RNNs, LSTMs, and Gated Recurrent Units (GRUs), are evaluated. LSTM is selected as
the primary model due to its ability to handle vanishing gradients and capture long-term
dependencies.
These models are trained using past stock prices to predict future closing prices. Metrics
such as Mean Squared Error (MSE) and Root Mean Squared Error (RMSE) are used for
performance evaluation. The performance of RNN-based models is compared with
traditional machine learning models such as linear regression and random forests.
RNN ARCHITECTURES FOR
STOCK PRICE PREDICTION
RECURRENT NEURAL NETWORK
(RNN) ARCHITECTURE
Recurrent Neural Networks are a type of
artificial neural network designed for
sequential data tasks, making them
highly effective for time series
prediction. Unlike feedforward neural
networks, RNNs retain information
through hidden state vectors, allowing
the model to capture temporal
dependencies. This makes them well-
suited for tasks like language modelling,
speech recognition, and financial
forecasting.
Long Short-Term Memory (LSTM)
LSTMs are a special type of RNN designed to solve the vanishing gradient
problem that standard RNNs encounter when trying to capture long-term
dependencies.
LSTM Components:
Forget Gate: Determines which information should be discarded from
the previous time step.
Input Gate: Selects what new information to store in the cell state.
Output Gate: Decides what information from the cell state should be
output.
ADVANTAGES OF LSTM IN STOCK
PREDICTION
Capturing Long-Term Dependencies: LSTMs can
remember information over extended periods,
essential for detecting trends in stock prices.
Handling Non-Linear Relationships: Financial
markets exhibit complex, non-linear behaviours
that LSTMs can model effectively.
Adaptability: LSTM models can be fine-tuned to
different stocks and market conditions, enhancing
their versatility.
BUILDING LSTM MODELS FOR
STOCK PRICE PREDICTION
The process of building an effective LSTM model
for stock price prediction can be broken down Model MAE RMSE R² Score
into a few key stages: data collection and
ARIMA
pre-processing, model design, training, and
evaluation. 4.2 5.0 0.70
Data Collection and Pre-processing
Model Design SVR 3.5 4.5 0.78
Training the Model
Algorithm for Stock Price Prediction
Using LSTM
LSTM 2.5 3.1 0.85
Model Evaluation:
Results and Analysis
Challenges
Overfitting: Overfitting is addressed through dropout and early
stopping, ensuring the model generalizes well to unseen data.
Data Volatility: Stock markets are unpredictable, and factors like
political or economic events introduce volatility that can skew
predictions.
Feature Selection: Incorporating additional features (e.g., trading
volume, technical indicators) could improve model accuracy.
CONCLUSION
Stock price prediction remains a complex and dynamic challenge
in the financial sector. This seminar has demonstrated the efficacy of
Recurrent Neural Networks, specifically LSTM models, in forecasting stock
prices with higher accuracy compared to traditional statistical methods.
The ability of LSTMs to capture temporal dependencies and model non-
linear relationships makes them well-suited for this task.
While the results are promising, it is essential to acknowledge the
limitations and continue refining these models to account for the
multifaceted nature of financial markets. Future research should focus on
enhancing model robustness, incorporating diverse data sources, and
exploring advanced neural network architectures to further improve
prediction accuracy and reliability.
THE END
THANK YOU.
