The Random Neural Network in Price Predictions

Everybody likes to make a good prediction, in particular, when some sort of personal investment is involved in terms of finance, energy or time. The difficulty is to make a prediction that optimises the reward obtained from the original contribution; this is even more important when investments are the core service offered by a business or pension fund generated by monthly contributions. The complexity of finance is that the human predictor may have other interests or bias than the human investor, the trust between predictor and investor will never be completely established as the investor will never know if the predictor has generated, intentionally or unintentionally, the optimum possible reward. This paper presents the Random Neural Network in recurrent configuration that makes predictions on time series data, specifically, prices. The biological model inspired by the brain structure and neural interconnections makes predictions entirely on previous data from the time series rather than predictions based on several uncorrelated inputs. The model is validated against the property, stock and Fintech market: 1) UK property prices, 2) stock markets indice prices, 3) cryptocurrency prices. Experimental results show that the proposed method makes accurate predictions on different investment portfolios.