Generating Asset Pricing Model via Symbolic Modeling—a Machine Learning-based Approach
Chinese Academy of SciencesResearchers develop Symbolic Modeling—an AI-powered technique creating unified mathematical models for financial asset pricing. Compared to neural network, the generated mathematical expression by symbolic modeling is easier to comprehend and analyze. Testing across hundreds of company’s datasets shows lower prediction errors and reduced unexplainable return compared to classic asset pricing models like CAPM or Fama-French 3-Factor model.