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4 views

Project 5j

Uploaded by

supercell427711
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Project 5:

Stock Price Predictor


Objective: Build a system that can predict the price of a specific stock using AI.
Creating a stock price predictor using AI and Python involves several steps and theories from
both finance and machine learning.

1. Data Collection
 Historical Data: Use APIs (like Yahoo Finance or Alpha Vantage) to gather historical
stock prices.
 Additional Data: Consider including other relevant data such as trading volume, market
indices, and macroeconomic indicators.
2. Data Preprocessing
 Cleaning Data: Handle missing values, remove outliers, and normalize the data.
 Feature Engineering: Create new features from existing data, such as moving
averages, volatility, and RSI (Relative Strength Index).
3. Choosing the Model
 Traditional Machine Learning Models:
 Linear Regression: For simple price forecasting.
 Decision Trees / Random Forests: Good for handling non-linear relationships.
 Support Vector Machines (SVM): Effective for classification problems in stock
movement direction.
 Deep Learning Models:
 Recurrent Neural Networks (RNNs): Especially LSTM (Long Short-Term
Memory) networks are suited for time series data.
 Convolutional Neural Networks (CNNs): Can be applied to analyze stock
price data as images (e.g., candlestick charts).
4. Model Training
 Split the dataset into training, validation, and test sets.
 Use techniques like k-fold cross-validation to improve model robustness.
 Optimize hyperparameters using methods like Grid Search or Random Search.

5. Model Evaluation
 Use metrics such as Mean Absolute Error (MAE), Mean Squared Error (MSE), or R-squared
to evaluate performance.
 Backtesting: Test the model against historical data to see how well it would have performed.

6. Deployment
 Once the model is trained and evaluated, deploy it using Flask or FastAPI for a web
application.
 Implement real-time data fetching and prediction capabilities.

7. Continuous Learning
 Stock market conditions change over time, so models should be updated regularly with new
data.
Sample Python Code:
import pandas as pd
import numpy as np
from sklearn.model_selection import train_test_split
from sklearn.linear_model import LinearRegression
from sklearn.metrics import mean_squared_error
import yfinance as yf

ticker = ‘AAPL’ # Example stock


data = yf.download(ticker, start=’2010-01-01′, end=’2023-01-01′)

data[‘Returns’] = data[‘Close’].pct_change()
data[‘Lag1’] = data[‘Returns’].shift(1)
data.dropna(inplace=True)

X = data[[‘Lag1’]]
y = data[‘Returns’]

X_train, X_test, y_train, y_test = train_test_split(X, y, test_size=0.2, random_state=42)

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

predictions = model.predict(X_test)
mse = mean_squared_error(y_test, predictions)
print(f’Mean Squared Error: {mse}’)

last_return = data[‘Returns’].iloc[-1]
future_prediction = model.predict([[last_return]])
print(f’Predicted future return: {future_prediction}’)

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