Description
A University of Florida finance professor said artificial intelligence (AI) models could be useful in predicting stock prices. Alejandro López-Lira used the Open AI chatbot ChatGPT to check if actions are good or bad for an action. It found that the chatbot could predict the direction of the next day's returns, CNBC reported. . Goldman Sachs had said that around 35% of financial jobs were at risk of being automated via AI. López-Lira said that the chatbot understands the information intended for humans and ensures that if the market does not respond perfectly, there will be a predictability of return. Experience has shown how well these large language models can meet financial tasks, the CNBC report added. ALSO READ: ChatGPT attempts JEE Advanced Exam. This is what he got. The López-Lira experiment did not include a target price or the model did not perform a mathematical task. Microsoft in a public demo said that ChatGPT-style technology often does the numbers. The professor said he was surprised by the results, saying they suggested sophisticated investors were not yet using ChatGPT-style machine learning. López-Lira and his partner Yuehua Tang reviewed more than 50,000 shares of a public stock data provider on the Nasdaq, New York Stock Exchange, and a small-cap stock exchange from October 2022. READ ALSO: Hello ChatGPT, ask practice questions for UPSC exams; From fellow student to search engine, many applications of the AI tool
They brought the stock into ChatGPT 3.5 with the notice and watched the stock's returns over the next trading day. According to López-Lira, the model performed well in almost every case when informed by a news headline. The professor said he found less than a one percent chance that the model would do the same by randomly choosing the next day's move rather than when prompted by a news headline. ChatGPT also outperformed commercial data sets with human sentiment scores, the report adds.
López-Lira said hedge funds contacted him for more information about his investigation. He also said he wouldn't be surprised if ChatGPT's ability to predict stock movements declines in the coming months.
