Using ClassifierXL to Find the Right Stock to Buy

Posted on Fr 10 April 2009 in misc • 2 min read

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    I recently downloaded the new version of TraderXL and was surprised to see a major update to the ClassifierXL module (as part of the NeuroXL suite). I’ve used this module before to classify like groups of stocks and identify (per my requirements) the right stock to buy out of a group of many. Major updates to the module include a better GUI interface and the inclusion of five neural net functions, namely the Threshold, Hyperbolic Tangent, Zero-based Log-sigmoid, Log-sigmoid and Bipolar Sigmoid functions. classifierxl-1 To see what it can do, I’m attaching a recently classified ADR stock scan spreadsheet from www.aaii.com.I downloaded this scan from AAII, used the zero-based log-sigmoid scan, and classified the stocks into 5 similar groupings.After it crunched the data it created two charts and a color coded spreadsheet from your data.If you flip to the charts in the spreadsheet, you’ll notice that cluster 1 and 5 have large groupings of similar stocks.These clusters represent the most interesting of the stock groups and should clue in the data modeler to some possible opportunities in the data. Let’s say you are interested in investing in a China based company and you have lots of data from a stock scan to go through. How can you identify a good candidate for more due diligence? First open the spreadsheet and then using the pull down data sorting menus to select China as your country of choice. classifierxl-2 The data in the spreadsheet will sort and show 7 China based stocks, with 5 being in Cluster 1 and 2 being in Cluster 5. Now this is interesting data revelation to me because not all of these 7 China based stocks are being classified as the same. If you further drill down the data by selecting the Top 10 EPS Growth Estimate, then you are left with 4 China based stocks in Cluster 1: LFC, JOBS, BIDU, and MR. These 4 companies should give you a good smaller list of stocks for further review. classifierxl-3 Granted, this example was a fast way of doing a complex data analysis but the ClassifierXL module helped simplify the process. The neat thing about this module is that it does all the heavy lifting for you and organizes the data in an easy to use spreadsheet!