Ranking stocks of listed companies on Tehran stock exchange using a hybrid model of decision tree and logistic regression

Authors

  • Nikkhah bahrami, Zahra PhD Candidate of Financial Management, Department of Financial Management, Faculty of Management, Tehran University, Tehran, Iran
  • Tehrani, Reza Professor of department of financial management and insurance, Faculty of Management, University of Tehran, Tehran, Iran
Abstract:

Much research has introduced linear or nonlinear models using statistical models and machine learning tools in artificial intelligence to estimate Iran's rate of return. The primary purpose of these methods is simultaneously use different independent variables to improve stock return rates' modeling. However, in predicting the rate of return, in addition to the modeling method, the degree of correlation of the independent variables with each other and, consequently, the biased increase of the model estimators is of particular importance. Hence, in this paper, we perform a concurrent model of decision tree and logistic regression with affective variables simultaneously and then make a nonlinear model of return rate. To evaluate the proposed model, information of 100 companies admitted to the stock exchange during the period 2011 to 2018 is considered. The results of our study show that the proposed hybrid algorithm performs better than competing models.

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Journal title

volume 13  issue 

pages  435- 460

publication date 2021-06

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