Markov Chain Model for Predicting the Stock Price of Paper and Paper Products Industry

Abstract

Markov chains, which are a stochastic process, are a method for analyzing the current behavior of variables to predict their future behavior. With stochastic analysis, it is possible to make decisions in stock markets and make predictions about the future. In this study, with the help of Markov chains, the stock prices of the companies traded in the paper and paper products industry in BIST were predicted. In order to realize the purpose of this study, the closing prices of the seven companies traded in the BIST for the period 01.06.2022-31.05.2023 were used. While it was concluded that six stocks would likely decrease in the long term, it was concluded that the stock of TEZOL company would increase in the long term. When the expected stock returns of the companies are examined, it was determined that VIKING is the company with the highest expected stock return, while KARTN is the company with the lowest expected stock return.