Variable selection of yearly high dimension stock market price using ordered homogenous pursuit lasso

Yusrina Andu, Muhammad Hisyam Lee*, Zakariya Yahya Algamal

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

1 Citation (Scopus)

Abstract

It is noting that the response variable and the explanatory variables are highly correlated in high dimension data. Hence, the selection of informative variables is important in order to achieve a better model interpretation and concomitantly improve the accuracy of the prediction. In this study, the variable selection in stock market price using statistical approach was carried out. It is pertinent since most of the previous study only concerns on the financial interests of the stock market. Therefore, this study considers the homogeneity structure in the highly correlated data on yearly stock market price by applying ordered homogenous pursuit lasso (OHPL) method. The performance results of OHPL were compared with lasso and elastic net. As a result, OHPL a had higher number of selected variables and a better prediction power than of lasso and elastic net. In conclusion, OHPL shows its capability to enhance variable selection while increasing the prediction power of the selected variables than its counterpart.

Original languageEnglish
Title of host publicationProceedings of the 27th National Symposium on Mathematical Sciences, SKSM 2019
EditorsSiti Nur Iqmal Ibrahim, Noor Akma Ibrahim, Fudziah Ismail, Lai Soon Lee, Wah June Leong, Habshah Midi, Nadihah Wahi
PublisherAmerican Institute of Physics Inc.
ISBN (Electronic)9780735420298
DOIs
Publication statusPublished - 6 Oct 2020
Externally publishedYes
Event27th National Symposium on Mathematical Sciences, SKSM 2019 - Bangi, Selangor, Malaysia
Duration: 26 Nov 201927 Nov 2019

Publication series

NameAIP Conference Proceedings
Volume2266
ISSN (Print)0094-243X
ISSN (Electronic)1551-7616

Conference

Conference27th National Symposium on Mathematical Sciences, SKSM 2019
Country/TerritoryMalaysia
CityBangi, Selangor
Period26/11/1927/11/19

Keywords

  • OHPL
  • high dimension
  • homogeneity
  • linear regression
  • variable selection

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