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Markov Chain Presentation

The document provides an overview of stochastic processes, which are collections of random variables that evolve over time, and their applications in various fields. It focuses on Markov Chains, a type of stochastic process where the next state depends only on the current state, and discusses their properties, transition probabilities, and applications such as weather forecasting and machine learning. The conclusion emphasizes the significance of these models in simplifying the understanding of random systems across multiple domains.

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41 views9 pages

Markov Chain Presentation

The document provides an overview of stochastic processes, which are collections of random variables that evolve over time, and their applications in various fields. It focuses on Markov Chains, a type of stochastic process where the next state depends only on the current state, and discusses their properties, transition probabilities, and applications such as weather forecasting and machine learning. The conclusion emphasizes the significance of these models in simplifying the understanding of random systems across multiple domains.

Uploaded by

aqsa.afzal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Stochastic Processes and Markov

Chain Model
A Basic to Intermediate Overview
Introduction to Stochastic
Processes
• • A stochastic process is a collection of
random variables that evolve over time.
• • Used to model systems that change in a
probabilistic manner.
• • Applications: Finance, Weather Forecasting,
Machine Learning, etc.
Markov Chain Model
• • A Markov Chain is a stochastic process
where the next state depends only on the
current state.
• • It follows the Markov Property: P(Xn+1 | Xn,
Xn-1, ..., X0) = P(Xn+1 | Xn).
• • Useful in modeling weather, stock prices,
and text generation.
Example: Weather Prediction
• Consider a simple Markov Chain with three
weather states:
• • Sunny (S)
• • Rainy (R)
• • Cloudy (C)
• The transition probabilities between these
states are given in the next slide.
Transition Probability Table
• A transition matrix represents the probability
of moving from one state to another:

• | From\To | Sunny (S) | Rainy (R) | Cloudy (C)


|
• |---------|----------|----------|----------|
• | Sunny (S) | 0.6 | 0.2 | 0.2 |
• | Rainy (R) | 0.3 | 0.4 | 0.3 |
• | Cloudy (C) | 0.2 | 0.3 | 0.5 |
Initial Probability Distribution
• • The initial probability distribution gives the
likelihood of starting in each state.
• • Example: If we start on a random day, we
assume:
• - P(Sunny) = 0.5
• - P(Rainy) = 0.3
• - P(Cloudy) = 0.2
• • The sum of probabilities must be 1.
Properties of Markov Chains
• • **Memoryless Property:** Future states
depend only on the present state.
• • **Transition Matrix:** Describes state
changes with probabilities.
• • **Stationary Distribution:** A probability
distribution that remains unchanged over
time.
Applications of Markov Chains
• Markov Chains are widely used in:
• • Weather Forecasting
• • Google PageRank Algorithm
• • Stock Market Analysis
• • Speech Recognition
• • Machine Learning (Hidden Markov Models,
Reinforcement Learning)
Conclusion
• • Stochastic processes help model random
systems evolving over time.
• • Markov Chains simplify modeling by
assuming memoryless transitions.
• • Applications span multiple domains,
including AI, finance, and climate modeling.

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