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Data Mining in Finance
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Trend Analysis
Trend Analysis involves identifying patterns, trends, and correlations in financial data over time. Data mining refines this technique by uncovering complex patterns and predicting future trends using historical data.
Portfolio Analysis
Portfolio Analysis determines the best investment mix for risk-return optimization. Data mining helps in refining portfolio strategies by identifying patterns and relationships between assets.
Ratio Analysis
Ratio Analysis involves examining various financial metrics' relationships to evaluate performance. Data mining applies algorithms to analyze large datasets, refining ratios that signal financial health.
Benchmarking
Benchmarking is the practice of comparing business processes and performance metrics to industry standards. Data mining can refine benchmarking by providing deeper insights and uncovering new comparative metrics.
Risk Analysis
Risk Analysis assesses the uncertainty in investment decisions. Data mining uses historical data and machine learning to predict risks more accurately and manage them effectively.
Monte Carlo Simulation
Monte Carlo Simulation uses probability distribution to model financial uncertainty. Data mining algorithms can enhance these simulations through better data-driven probability estimations.
Variance Analysis
Variance Analysis compares actual performance to budgeted or past performance, assessing deviations. Data mining enhances this by discovering hidden patterns that explain variances better.
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