Hands-On Machine Learning for Algorithmic Trading

Probabilistic latent semantic analysis

Probabilistic Latent Semantic Analysis (pLSA) takes a statistical perspective on LSA and creates a generative model to address the lack of theoretical underpinnings of LSA.

pLSA explicitly models the probability each co-occurrence of documents d and words w described by the DTM as a mixture of conditionally independent multinomial distributions that involve topics t.

The symmetric formulation of this generative process of word-document co-occurrences assumes both words and documents are generated by the latent topic class, whereas the asymmetric model assumes the topics are selected given the document, and words result from a second step given the topic:

The number of topics is a hyperparameter chosen ...