Implementing Machine Learning for Finance: A Systematic Approach to Predictive Risk and Performance Analysis for Investment Portfolios

© The Author(s), under exclusive license to APress Media, LLC, part of Springer Nature 2021

T. C. NokeriImplementing Machine Learning for Financehttps://doi.org/10.1007/978-1-4842-7110-0_5

5. Stock Clustering

Tshepo Chris Nokeri¹  

(1)

Pretoria, South Africa

 

A combination of stocks that an investor selects influences the investment portfolio’s performance. Some assets are highly risky to invest in, but others are not. High-risk assets are those whose prices change drastically in short periods. To secure capital, investors may select groups of stocks, rather than investing in a single stock or class of stocks. Given that there are many stocks to choose from, investors ordinarily find it arduous to single out a group of stocks with optimal performance. ...