Hybrid LSTM and PPO Networks for Dynamic Portfolio Optimization

arXiv — cs.LGTuesday, November 25, 2025 at 5:00:00 AM
  • A new paper presents a hybrid framework for portfolio optimization that combines Long Short-Term Memory (LSTM) forecasting with Proximal Policy Optimization (PPO) reinforcement learning. This innovative approach aims to enhance portfolio management by leveraging deep learning to predict market trends and dynamically adjust asset allocations across various financial instruments, including U.S. and Indonesian equities, U.S. Treasuries, and cryptocurrencies.
  • The significance of this development lies in its potential to improve investment strategies by providing a more adaptive and responsive system for portfolio management. By integrating LSTM's predictive capabilities with PPO's reinforcement learning, the framework can better navigate the complexities of financial markets, potentially leading to higher returns and reduced risks for investors.
  • This advancement reflects a broader trend in financial technology where machine learning techniques are increasingly employed to tackle challenges in market forecasting and asset management. The integration of various deep learning models, such as LSTM and PPO, highlights the ongoing evolution of predictive analytics in finance, paralleling other sectors that utilize advanced algorithms for improved decision-making and efficiency.
— via World Pulse Now AI Editorial System

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