The Role of AI in Risk and Return Analysis Using Stock Market Data: A Practical Application

Abstract

Artificial intelligence (AI) has brought about a lot of revolution in financial analytics by helping to accurately analyse the stock market data. This paper explores the significance of artificial intelligence in risk and return analysis by taking a practical example of selected Indian listed firms. The objective of the research is to analyse the annual returns of selected stocks, measure risk by volatility, evaluate risk and returns characteristics of the stocks and draw Risk – Return plots. Furthermore, the research will apply some artificial intelligence techniques to help in identifying patterns in historical stock market data to predict stock performance. The study combines the use of traditional financial measures together with artificial intelligence in analysing investments. It is anticipated that the research will be able to show that AI is effective in capturing complex market dynamics and therefore risk assessment will be made in a more reliable way.