A Prediction Approach for Stock Market Volatility Based on Time Series Data

A Prediction Approach for Stock Market Volatility Based on Time Series Data

Abstract:

Time series analysis and forecasting is of vital significance owing to its widespread use in various practical domains. Time series data refers to an ordered sequence or a set of data points that a variable takes at equal time intervals. Stock Market is considered to be one of the most highly complex financial systems which consists of various components or stocks, the price of which fluctuates greatly with respect to time. Stock market forecasting involves uncovering the market trends with respect to time. All the stock market investors aim to maximise the returns over their investments and minimise the risks associated. Stock markets being highly sensitive and susceptible to quick changes, the main aim of stock trend prediction are to develop new innovative approaches to foresee the stocks that result in high profits. This research tries to analyse the time series data of Indian stock market and build a statistical model that could efficiently predict the future stocks.

Existing System:

Forecasting is an important problem but with vital importance in all areas of real world like business and industry, medicine, social science, politics, finance, government, economics, environmental sciences and others. In recent years, with the rise of social media and other promising applications, stock market forecasting has attracted huge interest from people in general and business in particular. Short-term forecasting problems include predicting future events only upto a small time period. Such forecasts are particularly meant for a period ranging from few days, weeks, months or less than a year into future. Medium term forecasts are generally put into practice when we try to predict events that range for a period of one to two years into future.

 

 

 

Disadvantage:

Future being a mystery is always a challenging task to predict. From the ages, human nature has always been more curious about the future. Forecasting refers to an approach of predicting what is likely to occur in the future by observing what has happened earlier in the past and what is occurring at present. In other words, it is just similar to driving a car in forward direction by keeping an eye on the rear-view mirror of a car.

Proposed System:

Short-term forecasting problems include predicting future events only up to a small time period. Such forecasts are particularly meant for a period ranging from few days, weeks, months or less than a year into future. Medium term forecasts are generally put into practice when we try to predict events that range for a period of one to two years into future. On the other hand, the long term forecasts can extend over the medium term forecasts by many years. Both short and medium term forecasting approaches are put into practice for predicting wide range of events that may include operations management and budgeting or may even include selection of new research and development projects.