Constructing Cybersecurity Stocks Portfolio Using AI

This study explores the application of artificial intelligence, specifically ChatGPT-4o, in constructing and managing a portfolio of cybersecurity stocks over the period from Q1 2018 to Q1 2024. Leveraging advanced machine learning models, fundamental analysis, sentiment analysis, and optimization techniques, the AI-driven portfolio significantly outperformed leading cybersecurity ETFs, as well as broader market indices such as the Nasdaq 100 (QQQ) and S&P 500 (SPY). The methodology employed included data collection, stock filtering, predictive modeling using Random Forests and Support Vector Machines (SVMs), sentiment analysis through natural language processing (NLP), and portfolio optimization using Mean-Variance Optimization (MVO), with quarterly rebalancing to ensure responsiveness to evolving market conditions. The AI-selected portfolio achieved a total return of 273%, with strong risk-adjusted performance as demonstrated by key metrics such as the Sharpe ratio, highlighting the effectiveness of an AI-based approach in navigating market complexities and generating superior returns. The results of this study indicate that AI-driven portfolio management can uncover investment opportunities that traditional methods may overlook, offering a competitive edge in the cybersecurity sector and promising enhanced predictive accuracy, efficiency, and overall investment success as AI technologies continue to evolve.

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Publication Details

Journal
Forecasting
Published
2024-11-19
DOI
https://doi.org/10.3390/forecast6040053
Citations
8
Primary Topic
Stock Market Forecasting Methods
Type
article
Field-Weighted Citation Impact
3.92
Controls
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article

Constructing Cybersecurity Stocks Portfolio Using AI

Gil Cohen, Avishay Aiche, Zvi Winer
8 citations
Forecasting
Stock Market Forecasting Methods
3.92
article

Constructing Cybersecurity Stocks Portfolio Using AI

Gil Cohen, Avishay Aiche, Zvi Winer
article en
8 citations

Abstract

This study explores the application of artificial intelligence, specifically ChatGPT-4o, in constructing and managing a portfolio of cybersecurity stocks over the period from Q1 2018 to Q1 2024. Leveraging advanced machine learning models, fundamental analysis, sentiment analysis, and optimization techniques, the AI-driven portfolio significantly outperformed leading cybersecurity ETFs, as well as broader market indices such as the Nasdaq 100 (QQQ) and S&P 500 (SPY). The methodology employed included data collection, stock filtering, predictive modeling using Random Forests and Support Vector Machines (SVMs), sentiment analysis through natural language processing (NLP), and portfolio optimization using Mean-Variance Optimization (MVO), with quarterly rebalancing to ensure responsiveness to evolving market conditions. The AI-selected portfolio achieved a total return of 273%, with strong risk-adjusted performance as demonstrated by key metrics such as the Sharpe ratio, highlighting the effectiveness of an AI-based approach in navigating market complexities and generating superior returns. The results of this study indicate that AI-driven portfolio management can uncover investment opportunities that traditional methods may overlook, offering a competitive edge in the cybersecurity sector and promising enhanced predictive accuracy, efficiency, and overall investment success as AI technologies continue to evolve.

ForecastingVol. 6(4)
Western Galilee College (IL)
Openalex Percentile: Top 6%
Stock Market Forecasting Methods
3.92
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