By Group 5

Ankit Jain PGP08008

Raj Kumar Gupta PGP08042
Vaibhav Gangwar PGP08194
Varun Parvathaneni PGP08195
 Time series model said to follow a random walk as the differences from
one observation to the next observation are random
 In a random walk model, the time series itself is not random, however,
the first differences of time series are random.

Xt−Xt−1=et

Advantages:

• Stock and commodity prices follow a random walk since

today’s stock price is equal to yesterday’s stock price
plus a random shock
• the past movement or trend of a stock price or market
cannot be used to predict its future movement
  Time series model said to follow a random walk as the differences from
one observation to the next observation are random
 In a random walk model, the time series itself is not random, however,
the first differences of time series are random.

𝑦∗=Ø𝑦𝑡−1+Ø𝑦𝑡−2+ … +Ø𝑦𝑡−𝑝+𝜃1ɛ𝑡−1+𝜃2ɛ𝑡−2 + … + 𝜃𝑞ɛ𝑡−𝑞

Advantages:

• Includes both autoregressive (AR) as well

as moving average (MA) components
• AR components capture the "change since
last time“ while MA components capture
smoothed trends in the data
• Hence more flexible as compared to other
statistical models
 Results

Models MAE RMSE MAPE

Neural Network 0.026518 0.033505 2.153416

ARIMA 0.027091171 0.034169801 2.077353269

Random Walk 0.028459 0.036626 3.635207

• From the above table, we can see that Neural Network has lowest error
• Thus Neural Network model is best Fit for prediction of Gold prices
Forecast Plots