A Study on Stock-Recommendation Based on Supply Chain Dependence Information Analysis

In this paper, a new stock-recommendation based on supply chain dependence (SCSRS) is proposed for small investors who want to invest in the stock market. In particular, when small investors take a stradegy of short- and medium-term investment, their investment targets are often currently popular industry stocks such as major stocks in market. When the opportunity to invest in the major stocks is missed, the upstream and downstream of the major stocks may have similar linkage trends and attract small investors to enter the market. Therefore, this paper uses the correlation between the major stocks and their upstream and downstream stocks in this research. The core of the discussion focuses on the dependency between Taiwan Semiconductor Manufacturing Company and its 41 supplier-chain companies. A series of testbacks using historic dataset of Taiwan Stock Market is conducted to verify the investment performance of the presented Supply-Chain-based Recommendation Systems. Numeric results demonstrate that the proposed system is effective when the stocks of upstream companies are selected. In the backtests, the presented system outperforms with 62.5% winning rate in comparison with random selections.