AI in Asset Pricing and Investment Strategy : A Complementary Approach
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This research explores the integration of Artificial Intelligence ( AI ) into traditional asset pricing models and investment strategies , focusing on whether Ai acts as a replacement or a complement to human financial analysis abilities. While traditional models like the Capital asset pricing Model ( CAPM ) rely on linear assumptions , AI and specifically machine learning , allows for the processing of non-linear data . This study examines the synergy between algorithmic precision and historical market wisdom , using a quantitative framework to measure performance enhancements in diversified portfolios . The result indicates that while AI excels at short-term pattern recognition and risk qualification , it requires the foundational stability of traditional assets and human oversight during systematic shocks ( Market risk ) .
Keywords
Artificial Intelligence, Asset Pricing, Financial Innovation, Investment Strategy, Machine Learning