AI and stock market analysis: How artificial intelligence is revolutionizing forecasting

AI and stock market analysis: How artificial intelligence is revolutionizing forecasting

How www.telepolis.de reports, stock market analysis is poised for a revolution based on AI-based forecasts. New machine learning methods are intended to enable more precise predictions about price developments. A study published in the Journal of Asset Management shows the potential of ML methods to make more accurate predictions.

Experts point out that traditional analysis methods have their limits when it comes to identifying the complex relationships within large data sets. The benefits of machine learning lie in its ability to uncover complex relationships and connect rich financial data.

Researchers analyzed various ML systems and examined nearly 1.9 billion stock-month anomaly observations in 68 countries over nearly four decades. The results were impressive: AI-based models significantly outperformed traditional methods, with an average monthly excess return of up to 2.71 percent.

These insights could drive the development of new stock pricing models and enable financial managers and investors to make more informed investment decisions. Nevertheless, the authors of the study emphasize the importance of careful data preparation and the consideration of ethical and regulatory aspects when dealing with AI technologies.

The impact on the market and the financial industry could be significant, as more accurate forecasts enable improved capital allocation and risk reduction. AI-based stock analysis could significantly change the rules of the game for financial investment and challenge traditional analysis methods.