Introducing the problem statement

The stock market is a place where you can buy and sell units of ownership in the company, which we call stocks. If the company performs well and increases its profit, then you will earn some profit as well because you have the stocks of the company, but if the company's profit goes down, then you will lose the money you have with the company. So if you invest your money in the right company at the right time, it could lead to you earning quite a lot of money. The question is which company's stock should you buy? Is there any way we can predict the future prices of the stock of any company given the historical prices of the company's stock so that we can have higher chances of getting good returns? The answer is yes. This is what we will explore in this chapter.

If you invest in the stock market, then you may have heard that stock prices are completely random and unpredictable. This is called the efficient market hypothesis, but a majority of the big financial...