Mullingar student develops AI engine to outsmart stock market volatility

A Coláiste Mhuire student has harnessed the power of artificial intelligence to bridge the gap between global breaking news and stock market performance. Luke Tully’s project, titled "AI Powered Portfolio Management," aims to shield investors from sudden financial downturns by analyzing news sentiment in real-time.

The core of the project relies on the understanding that information moves markets. Luke’s system uses "live scraping" to scan international financial giants like Yahoo Finance, CNBC, and Bloomberg for any mention of companies within the Dow Jones.

"What my project does is it scrapes live financial news," Luke explained. "It then uses an API key to send it to OpenAI. What ChatGPT does is it decides on whether it is negative, positive, or neutral information."

This sentiment analysis then feeds into a custom-built allocation engine. If the news is flagged as negative, the system automatically suggests reducing the "weight" of that stock in a user's portfolio to mitigate potential losses. Conversely, if a positive story breaks, the engine recommends increasing the investment to maximize profit.

While the software is highly advanced, Luke is careful to emphasize that it is a tool for the investor rather than a fully autonomous robot. "It's not fully automated," he noted. "It does the process, and then you have to grant it permission to actually make a trading decision."

The inspiration for the project came from Luke’s deep interest in finance and a desire to understand the mechanics behind price fluctuations.

Although Luke is not yet of legal age to invest in the stock market himself, he has put his algorithm to the test through rigorous simulations. By comparing a portfolio managed by his AI against a standard, unanalyzed portfolio, he observed significant results in just seven days.

"Over the course of the week, we saw a risk reduction of 13%," Luke revealed.

By turning raw data into actionable financial advice, Luke believes, his system offers a glimpse into a future where individual investors can react to global events with the same speed as major Wall Street firms.