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Stock Price Prediction and Investment Recommendations through
Machine Learning Analysis
1
Hasibul Islam,
2
Wary Hossain Rabby, 3Sadia Khanum,
4
Md. Emran Sikder,
5
A. S. S. M. Q-E-Elahy,
6
Gias Uddin &
7
MD Rafiqul Islam
1,2,5,7
Jahangirnagar University,
3
City University,
4
Daffodil International University,
6
Uttara University,
Bangladesh
DOI:
https://doi.org/10.51244/IJRSI.2025.120800301
Received: 07 Sep 2025; Accepted: 13 Sep 2025; Published: 07 October 2025
We’re researching how our thesis can help guess stock prices and suggest smart investment moves. We start by
checking if the current stock prices are right, looking at both the percent- age and money differences. We also
predict the prices tomorrow, showing the real-time and guessed numbers and explaining how much they differ.
After that, we give practical advice in three categories: Sell, Hold, and Buy, so people can make smart choices.
We also look at what happens if the stock prices are guessed wrong and how it affects people’s investment
portfolios.
INTRODUCTION
In our thesis, firstly we check if current stock prices are right, looking at the percentage and money differences.
Then, we try to guess what the prices will be tomorrow, comparing real-time and guessed numbers and
explaining the differences. Our suggestions are simple: Sell, Hold, or Buy, to help investors make smart
choices. We also look at what happens if our guesses are wrong and how it affects people’s investments.
In this chapter, the motivation behind the research is introduced. After that, we will present the objectives of
our thesis. This thesis includes the significance of the problem and problem statement in detail. Then we will
present the contributions and significance of the statements. The chapter ends with a short description of the
organization of the thesis.
Motivation
We need to know how our money in stocks can go up or down, both in percentage and actual value. Trying to
guess what the stock price will be tomorrow includes looking at trends and how the market is doing. When
deciding whether to sell, keep, or buy stocks, it depends on things like how the market is changing and what
you want to achieve with your investments. Also, if we make a mistake in predicting, it can lead to losing
money. So, it’s smart to think carefully, make informed choices, and maybe get advice from experts in
handling the ups and downs of the stock market.
Objectives
1.
Assess the accuracy of current stock prices.
2.
Determine correctness in percentage and actual value.
3.
Predict next-day stock prices in real-time.
4.
Display and compare predicted and actual prices in percentage and amount.
5.
Provide clear recommendations for buying shares: Sell, Hold, or Buy.
6.
Examine the impact of incorrect share prices on the overall investment portfolio.
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Contribution to Knowledge and Statement of Significance
1. This thesis significantly advances financial knowledge by:
2. Enhances understanding of stock price accuracy through machine learning analysis.
3. Provides valuable insights into next-day price predictions with real-time comparisons.
4. Contributes practical recommendations for buying shares at critical stages.
5. Highlights the significant impact of incorrect share prices on investment portfolios.
Thesis Organization
We have divided our thesis into five chapters. In Chapter 1, Introduction and some related works are reviewed.
Chapter 2 gives a Literature review that indicates the related work to our thesis. Chapter 3, explains our
research methodology and the mechanism of how we work. Chapter 4, presents an analysis of the results of our
thesis applied to our dataset and discussion. Chapter 5, represents a Conclusion of our thesis.
LITERATURE REVIEW
Filtering an audio signal with an all-pass filter does not usually have a major effect on the signal’s timbre. The
all- pass filter does not change the frequency content of the signal, but only introduces a phase shift or delay.
Audibility of the phase distortion caused by an all-pass filter in a sound reproduction system has been a topic of
many studies, see, e.g., [1], [2]. In this paper, we investigate audio effects processing using high-order all-pass
filters that consist of many cascaded low-order all-pass filters. These filters have long chirp-like impulse
responses. When audio and music signals are processed with such a filter, remarkable changes are obtained that
are similar to the spectral delay effect [3], [4].
Introduction
In this part, we will explain similar works, an overview of the research, and some of the research’s obstacles.
We will cover other study papers and their work’s methodology and correctness. We give a summary of stock
price analysis around the world. We will go into how we improve the present price accuracy, next-day price
prediction and buying recommendations, and impact on the portfolio.
Related Work
We mentioned some papers related to our work. A Davis,
C. K.
[1]
Exploring the intersection of machine learning, quantitative portfolio choice, and mispricing in
financial markets. This abstract highlights the potential of advanced algorithms to identify mispriced assets and
their impact on optimizing portfolio selection strategies, offering valuable insights for investors and researchers
alike. Gu, A., Viens,
F.G. and Yi, B.
[2]
This topic explores ideal risk-sharing and investment approaches for insurers facing
mispricing and uncertainty in models, enhancing financial stability and maximizing returns. Tu, J. and Zhou,
G.
[3]
This re- search explores the integration of economic objectives into Bayesian priors, addressing parameter
uncertainty in port- folio choice, and offering valuable insights for decision- making in financial contexts. Ang,
A., Papanikolaou, D. and Westerfield, M.M.
[4]
The thesis explores how people make investment choices,
considering illiquid assets that are harder to sell. It shows that uncertainty about the duration of illiquidity
increases risk aversion, leading to reduced allocation in both liquid and illiquid assets. Investors are willing to
sacrifice 2% of their wealth to hedge against rare illiquidity crises. Ben-David, I., Drake, M.S. and Roulstone,
D.T.
[5]
This study examines how companies make acquisition decisions based on investor perceptions of over
or undervaluation (measured using short interest). Overvalued firms are 54% more likely to acquire other
companies using their stock, while undervalued ones per- form better in cash acquisitions. Misvaluation
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influences merger strategies and outcomes. Cvitanic´, J., Lazrak, A., Martellini, L., and Zapatero, F.
[6]
This
study explores how to make the best investment choices when we don’t know all the information, and shows
that learning about expected returns can significantly improve investment decisions. It finds that following
analysts advice is not very helpful in making profitable investments. Liu, J. and Longstaff, F.A.
[7]
How a cautious investor should invest their money when
there’s a chance to make easy profits through arbitrage (buying and selling assets to take advantage of price
differ- ences). Doukas, J.A., Kim, C.F. and Pantzalis, C.
[8]
Stocks with higher risk often have bigger price
differences due to the challenges arbitrageurs face in trading them.rensen,
C.
[9]
Smart investing using stocks and bonds, suggesting zero-coupon bonds for protection. Utilizes
meanvariance approach for optimal wealth growth. Stulz, R.M.
[10]
How people from different countries decide
where to invest and how it affects investment returns. It reviews theories, empirical tests, and their significance
in international finance. Davis, C.K.
[11]
Why mispricing can occur in the stock market and how it affects
investments and prices.
RESEARCH METHODOLOGY
Introduction
In this part, we use Decision Tree Regression, Decision Tree Classification, Gradient Boosting, ARIMA,
Random Forest Regression and to analyze the data set. We have also visualized the data with various attribute
features.
Working Procedure
We convert our working procedure into the following:
Fig: Methodology Flowchart
Data Pre-processing
The data processing represents evaluating the accuracy of present stock prices by determining correctness in
percentage and amount. It also encompasses predicting next- day prices in real-time, comparing actual and
predicted values. Additionally, it includes processing data to provide practical recommendations for buying
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shares at different stages and assessing the impact of incorrect share prices on investment portfolios.
Table 1. Comparison Table
Model Development and Validation
Decision Tree Regression: Used for Predict Current Price Accuracy of a share where we got 98.46% ac-
curacy and 1.54% loss by 70% data for training, 15% data for testing & 15% data for validation.
Random Forest Regression: Used for Predict Cur- rent Price Accuracy of a share where we got 99.01%
accuracy and 0.99% loss by 80% data for training, 10% data for testing & 10% data for validation.
Auto Regressive Integrated Moving Average (ARIMA): Used for Predict Next Day Close Price of a share
where we got 98.19% accuracy and 1.54% loss by 70% data for training, 15% data for testing & 15% data for
validation.
Gradient Boosting: Used for Predict Stock Buying Recommendation of a share where we got
recommendation like Buy/Sell/Hold by 70% data for training, 15% data for testing & 15% data for validation.
Decision Tree Classification: Used for Predict Port-folio Impact from a share where we got 99.17% ac- curacy
and 0.83% loss by 80% data for training, 10% data for testing & 10% data for validation.
Comparison Table
We carefully studied nine thesis papers and found that ours is better because it gives more efficient results.
This means our way of doing things and what we discovered are really important. It makes our thesis stand out
and adds something valuable to what others have already done.
RESULT ANALYSIS AND DISCUSSION
Introduction
First, we will discuss how and where we have collected data. After that, we explain the dataset that we used and
ex-
plain how we set up the environment for implementing the proposed system. Lastly, we explain the result
analysis and discussion then the accuracy of the present price and next- day price prediction and Buying
recommendations and im- pact on the portfolio.
Authors
Works
Methods
Datasets
Cvitanic´, J., Lazrak,
A., Martellini,
L.
and
Zapatero,
F. (2006)
Dynamic stock buying
recommen- dation
SVMs,
ANNs & KNN
Data.gov & Interactive
Brokers
Gu, A.,
Viens, F.G. and Yi,
B. (2017)
Reinsurance and
Invest- ment strategies
Neural Net-
works & SVM
Tingo & Quandl
Davis, C.
K. (2022)
Portfolio Choice &
Mispricing
Linear Regres-
sion
Alpha Querry
Liu, J. and
Losing
LSTM,
Interactive
Longstaff,
F.A. (2004)
money on arbitrage
GARCH
& Ge- netic
Algo- rithm
Brokers & Data.gov
Doukas, J.A., Kim,
C.F. and Pantzalis,
C. (2010)
Arbitrage risk and
stock mispricing
LSTM & SVM
Interactive Brokers
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Data Collection
We have used an existing dataset that has been collected from Real-time data. The name of the dataset is Yahoo
Fi-
Data Preprocessing
1.
Handle missing values.
2.
Calculate additional indicators for OHLCV.
3.
Calculate relevant financial matrices: Moving averages; Relative strength index (RSI); Volatility.
4.
Outliers normalization
5.
Data splitting (80% training, 10% testing & 10% validation)
Dataset Information
In our thesis, these data include:
1)
Stock Prices: Daily or periodic records of the stock’s historical prices.
2)
Financial Metrics: Information like earnings, revenue, and other financial indicators.
3)
Technical Indicators: Calculated values based on stock price patterns, helping analyze trends.
4)
Economic Factors: Data on broader economic conditions influencing the stock market.
5)
Market Sentiment: Analysis of news and social media sentiment impacting market behavior.
6)
Trading Activity: Volume data represents the number of shares traded.
7)
Time Series Information: Sequential data reflects how stock prices change over time.
8)
Binary Labels: Indicators showing if stock prices went up, down, or remained unchanged.
9)
Company Events: Information on company-specific occurrences affecting stock values.
10)
External Influences: Factors like global events or geopolitical changes affecting financial markets.
Experimental Setup
To evaluate the performance and effectiveness of our thesis, we applied several algorithms and models. The
paper was carried out on a computer with Windows 11 and we used Google collab and python programming
language.
The experimental setup for our thesis involves several key components:
1)
Gather historical stock price data, including relevant financial indicators and market data.
2)
Clean and preprocess the data, handling missing values, normalizing numerical features, and encoding
categorical variables.
3)
Identify key features influencing stock prices through analysis and domain knowledge.
4)
Divide the dataset into training and testing sets to train the model on one subset and evaluate its
performance on another.
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5)
Choose machine learning models suitable for stock price prediction, such as Random Forest, ARIMA, or
Decision Trees.
6)
Fine-tune model parameters for optimal performance using techniques like grid search or random search.
7)
Train the selected models on the training dataset, allowing them to learn patterns and relationships.
8)
Assess the models’ performance on the testing dataset using appropriate metrics like Mean Absolute Error
(MAE) or classification accuracy.
9)
Develop investment strategies based on model pre- dictions, considering risk tolerance and portfolio
optimization.
10)
Simulate the impact of recommended trades on a portfolio, analyzing returns, and risks.
11)
Validate the models by applying them to historical data to see how well they would have performed in the
past. This part represents how
12)
Implement risk management strategies to mitigate potential financial losses associated with model pre-
dictions.
RESULT ANALYSIS
The total experiment analysis has been carried out. Here we have shown the validation result that we achieve
when our system predicts present price accuracy and next-day price prediction, and displays buying
recommendations and portfolio impact. We have used an existing dataset that has been collected from Real-time
data. The name of the dataset is Yahoo Finance (API Token), Alpha Vantage (Se- cret Key), and IEX Cloud
(Public Key & Private Key). We have used some algorithms like ARIMA, Random Forest Regression,
Decision Tree Regression, and Decision Tree classification.
Fig. 1 Predicting Price Accuracy
Fig. 2. Predicting Frequency Accuracy
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Fig. 3. Predicting Price Accuracy
Fig. 4. 4 Years Price Accuracy
Fig. 5. Fluctuate Over Time Period
Fig. 6. Fluctuate Over Feature Engineering
DISCUSSION
We carefully check if current stock prices are right, evaluating accuracy in both percentage and actual amounts.
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Moving to Next-Day Prediction Insights, we compare real- time and predicted prices, focusing on differences
in per- percentage and amount. In Strategic Buying recommendations, we unveil the model’s advice at key
stages: Sell, Hold, and Buy. The final part, Portfolio Impact Examination.
Fig. 7. Prices in Candlestick Pattern
Fig. 8. Outcomes
Fig. 9. Equity Curve
Fig. 10. Average Result
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Fig. 11. Faceted Distributions
Fig. 12. Categorical Distributions
Fig. 13. Predicting Time Series
Fig. 14. Predicting Investors’ Portfolio Impaction, delves into the fallout of inaccurate share price pre- dictions
on the investment portfolio.
CONCLUSION
We looked at predicting stock prices and giving investment advice using machine learning, finding some
important information. Checking how accurate the current prices are shows that the model can tell if they’re
right, measuring correctness in percentages and real amounts. Predicting prices for the next day demonstrated
that the model is good at comparing what it thinks will happen to what re- ally happens, showing the
differences in percentages and amounts. The advice on when to buy or sell, called Strategic Buying
Recommendations, gave practical suggestions at important times: Sell, Hold, and Buy. However, we also
researched how getting the share prices wrong could affect an investment portfolio, emphasizing the need to
improve the model for better accuracy and to reduce risks. Looking ahead, making our machine learning
system better is crucial for navigating the complexities of the stock market.
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Fig. 15. Relatively Strength Index
Fig. 16. Portfolio Value & Volatility Over Time
Compliance with ethical standards
Acknowledgement
The authors would like to thank the authors [Wary Hossain Rabby, Sadia Khanum, Md. Emran Sikder,
A.S.S.M.Q-E-Elahy, Gias Uddin and MD Rafiqul Islam] for their valuable support and contributions to this
work.
Disclosure of conflict of interest
The authors have no relevant financial or non-financial interests to disclose.
Statement of Ethical Approval
This article does not contain any studies with human participants or animals performed by any of the authors.
Statement of Informed Consent
This article does not contain any studies with human participants, and therefore informed consent was not
required.
REFERENCES
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Gu, F. G. Viens, B. Yi, “Optimal reinsurance and investment strategies for insurers with mispricing and
model ambiguity,” Insurance: Mathematics and Economics, vol. 72, pp. 235249 (2017).
INTERNATIONAL JOURNAL OF RESEARCH AND SCIENTIFIC INNOVATION (IJRSI)
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