PREDICTING STOCK MARKET TRENDS USING BUSINESS INTELLIGENCE AND ANALYTICS: A case study using FTSE 100
Aside from the potential for financial benefits and wealth building, the stock market presents hurdles and barriers to investors. Stock prices’ intrinsic volatility and unpredictability, impacted by a variety of factors such as economic conditions, geopolitical events, industry trends, and investor opinion, produce uncertainty and a perception of high risk (Sari et al., 2022). The complexity of stock markets and the availability of information might overwhelm potential investors, resulting in a lack of perceived understanding and the fear of making erroneous decisions and incurring financial losses.
The issues being looked at here include:
- Volatility and uncertainty
- Lack of knowledge and information overload
The aim of this project is to leverage business intelligence and analytic tools in addressing issues of market volatility, accessibility, and uncertainty in the stock market, with a focus area on the FTSE 100. The goal of the project is to give data-driven insights as it relates to investing in the stock market to enable users to make informed decisions and improve investment performance for investors.
The foundation of this project is based on the following questions, which focus is to evaluate the use of business intelligence and analytics in predicting the stock market trends of FTSE 100. They include:
- What are the factors that influence the daily closing price of the FTSE100 index
- How accurate is the use of business intelligence and analytics techniques in predicting the stock market FTSE 100?
- What insights can be gotten effectively by exploiting the user-friendly interface and data visualization dashboard to incorporate data-driven insights into their stock market investing decision-making process by individuals and investors?
This project focused on the FTSE 100 as a major market index. FTSE 100 is a prominent stock market index that has a notable background and tracks the performance of the 100 largest companies listed on the London Stock Exchange (LSE) (Haq et al.,2020). According to Murat and Ersoy (2018), it was established on January 3, 1984, with a base level of 1,000 and reached its highest closing value of 7,771.93 as at January 2023. Its major goal was to act as a benchmark, providing insights into the performance of the largest publicly traded corporations in the United Kingdom.
The project focused on predicting FTSE 100 stock market closing prices from historical data obtained from Yahoo Finance, a widely recognized online platform that provides a plethora of financial information and data using business intelligence and analytical tools for a period of 10 years (2013 to 2023) with the objective of evaluating the accuracy of the technique used in predicting the stock market using performance metrics.
The relevance of this project rests in its ability to address significant issues and provide valuable insights in the field of stock market investment. The project attempts to simplify complex financial information and empower investors to make informed investment decisions by leveraging business intelligence (BI) technologies and tools. The creation of a user-friendly interface and data visualization dashboard can increase data comprehension and make stock market information more accessible to a wider audience.
Incorporate real-time analytics to inform decision makers on-the-go.