From Local Patterns to Global Understanding: Cross-Stock Trend Integration for Enhanced Predictive Modeling

TL;DR

This paper introduces Cross-Stock Trend Integration (CSTI), a federated learning-inspired method that combines local stock patterns into a global model, significantly improving stock price prediction accuracy while preserving data privacy.

Contribution

It presents a novel cross-stock pattern integration approach based on federated learning principles, enabling collaborative model training across multiple stocks without sharing raw data.

Findings

Outperforms benchmark models in predictive accuracy

Reduces training time through parallel local model training

Enhances understanding of cross-stock price dynamics

Abstract

Stock price prediction is a critical area of financial forecasting, traditionally approached by training models using the historical price data of individual stocks. While these models effectively capture single-stock patterns, they fail to leverage potential correlations among stock trends, which could improve predictive performance. Current single-stock learning methods are thus limited in their ability to provide a broader understanding of price dynamics across multiple stocks. To address this, we propose a novel method that merges local patterns into a global understanding through cross-stock pattern integration. Our strategy is inspired by Federated Learning (FL), a paradigm designed for decentralized model training. FL enables collaborative learning across distributed datasets without sharing raw data, facilitating the aggregation of global insights while preserving data privacy. In our adaptation, we train models on individual stock data and iteratively merge them to create a unified global model. This global model is subsequently fine-tuned on specific stock data to retain local relevance. The proposed strategy enables parallel training of individual stock models, facilitating efficient utilization of computational resources and reducing overall training time. We conducted extensive experiments to evaluate the proposed method, demonstrating that it outperforms benchmark models and enhances the predictive capabilities of state-of-the-art approaches. Our results highlight the efficacy of Cross-Stock Trend Integration (CSTI) in advancing stock price prediction, offering a robust alternative to traditional single-stock learning methodologies.