• Journal of Internet Computing and Services
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• v.15 no.3
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• pp.109-116
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• 2014

This study proposed new instance selection using neural network with weighted fuzzy membership functions(NEWFM) based on Takagi-Sugeno(T-S) fuzzy model to improve the classification performance. The proposed instance selection adopted weighted average defuzzification of the T-S fuzzy model and an interval selection, same as the confidence interval in a normal distribution used in statistics. In order to evaluate the classification performance of the proposed instance selection, the results were compared with depending on whether to use instance selection from the case study. The classification performances of depending on whether to use instance selection show 77.33% and 78.19%, respectively. Also, to show the difference between the classification performance of depending on whether to use instance selection, a statistics methodology, McNemar test, was used. The test results showed that the instance selection was superior to no instance selection as the significance level was lower than 0.05.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.39 no.1
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• pp.105-115
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• 2016

Ensemble classification involves combining individually trained classifiers to yield more accurate prediction, compared with individual models. Ensemble techniques are very useful for improving the generalization ability of classifiers. The random subspace ensemble technique is a simple but effective method for constructing ensemble classifiers; it involves randomly drawing some of the features from each classifier in the ensemble. The instance selection technique involves selecting critical instances while deleting and removing irrelevant and noisy instances from the original dataset. The instance selection and random subspace methods are both well known in the field of data mining and have proven to be very effective in many applications. However, few studies have focused on integrating the instance selection and random subspace methods. Therefore, this study proposed a new hybrid ensemble model that integrates instance selection and random subspace techniques using genetic algorithms (GAs) to improve the performance of a random subspace ensemble model. GAs are used to select optimal (or near optimal) instances, which are used as input data for the random subspace ensemble model. The proposed model was applied to both Kaggle credit data and corporate credit data, and the results were compared with those of other models to investigate performance in terms of classification accuracy, levels of diversity, and average classification rates of base classifiers in the ensemble. The experimental results demonstrated that the proposed model outperformed other models including the single model, the instance selection model, and the original random subspace ensemble model.

• The Journal of Information Systems
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• v.26 no.3
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• pp.63-90
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• 2017

Purpose This study proposes a novel system trading model using case-based reasoning (CBR) based on absolute similarity threshold. The proposed model is designed to optimize the absolute similarity threshold, feature selection, and instance selection of CBR by using genetic algorithm (GA). With these mechanisms, it enables us to yield higher returns from stock market trading. Design/Methodology/Approach The proposed CBR model uses the absolute similarity threshold varying from 0 to 1, which serves as a criterion for selecting appropriate neighbors in the nearest neighbor (NN) algorithm. Since it determines the nearest neighbors on an absolute basis, it fails to select the appropriate neighbors from time to time. In system trading, it is interpreted as the signal of 'hold'. That is, the system trading model proposed in this study makes trading decisions such as 'buy' or 'sell' only if the model produces a clear signal for stock market prediction. Also, in order to improve the prediction accuracy and the rate of return, the proposed model adopts optimal feature selection and instance selection, which are known to be very effective in enhancing the performance of CBR. To validate the usefulness of the proposed model, we applied it to the index trading of KOSPI200 from 2009 to 2016. Findings Experimental results showed that the proposed model with optimal feature or instance selection could yield higher returns compared to the benchmark as well as the various comparison models (including logistic regression, multiple discriminant analysis, artificial neural network, support vector machine, and traditional CBR). In particular, the proposed model with optimal instance selection showed the best rate of return among all the models. This implies that the application of CBR with the absolute similarity threshold as well as the optimal instance selection may be effective in system trading from the perspective of returns.

• Journal of Information Processing Systems
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• v.14 no.2
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• pp.418-434
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• 2018

With the increasing use of the Internet and electronic documents, automatic text categorization becomes imperative. Several machine learning algorithms have been proposed for text categorization. The k-nearest neighbor algorithm (kNN) is known to be one of the best state of the art classifiers when used for text categorization. However, kNN suffers from limitations such as high computation when classifying new instances. Instance selection techniques have emerged as highly competitive methods to improve kNN through data reduction. However previous works have evaluated those approaches only on structured datasets. In addition, their performance has not been examined over the text categorization domain where the dimensionality and size of the dataset is very high. Motivated by these observations, this paper investigates and analyzes the impact of instance selection on kNN-based text categorization in terms of various aspects such as classification accuracy, classification efficiency, and data reduction.

• Journal of Intelligence and Information Systems
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• v.20 no.4
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• pp.121-139
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• 2014

Predicting corporate failure has been an important topic in accounting and finance. The costs associated with bankruptcy are high, so the accuracy of bankruptcy prediction is greatly important for financial institutions. Lots of researchers have dealt with the topic associated with bankruptcy prediction in the past three decades. The current research attempts to use ensemble models for improving the performance of bankruptcy prediction. Ensemble classification is to combine individually trained classifiers in order to gain more accurate prediction than individual models. Ensemble techniques are shown to be very useful for improving the generalization ability of the classifier. Bagging is the most commonly used methods for constructing ensemble classifiers. In bagging, the different training data subsets are randomly drawn with replacement from the original training dataset. Base classifiers are trained on the different bootstrap samples. Instance selection is to select critical instances while deleting and removing irrelevant and harmful instances from the original set. Instance selection and bagging are quite well known in data mining. However, few studies have dealt with the integration of instance selection and bagging. This study proposes an improved bagging ensemble based on instance selection using genetic algorithms (GA) for improving the performance of SVM. GA is an efficient optimization procedure based on the theory of natural selection and evolution. GA uses the idea of survival of the fittest by progressively accepting better solutions to the problems. GA searches by maintaining a population of solutions from which better solutions are created rather than making incremental changes to a single solution to the problem. The initial solution population is generated randomly and evolves into the next generation by genetic operators such as selection, crossover and mutation. The solutions coded by strings are evaluated by the fitness function. The proposed model consists of two phases: GA based Instance Selection and Instance based Bagging. In the first phase, GA is used to select optimal instance subset that is used as input data of bagging model. In this study, the chromosome is encoded as a form of binary string for the instance subset. In this phase, the population size was set to 100 while maximum number of generations was set to 150. We set the crossover rate and mutation rate to 0.7 and 0.1 respectively. We used the prediction accuracy of model as the fitness function of GA. SVM model is trained on training data set using the selected instance subset. The prediction accuracy of SVM model over test data set is used as fitness value in order to avoid overfitting. In the second phase, we used the optimal instance subset selected in the first phase as input data of bagging model. We used SVM model as base classifier for bagging ensemble. The majority voting scheme was used as a combining method in this study. This study applies the proposed model to the bankruptcy prediction problem using a real data set from Korean companies. The research data used in this study contains 1832 externally non-audited firms which filed for bankruptcy (916 cases) and non-bankruptcy (916 cases). Financial ratios categorized as stability, profitability, growth, activity and cash flow were investigated through literature review and basic statistical methods and we selected 8 financial ratios as the final input variables. We separated the whole data into three subsets as training, test and validation data set. In this study, we compared the proposed model with several comparative models including the simple individual SVM model, the simple bagging model and the instance selection based SVM model. The McNemar tests were used to examine whether the proposed model significantly outperforms the other models. The experimental results show that the proposed model outperforms the other models.

• Proceedings of the Korea Inteligent Information System Society Conference
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• 2006.06a
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• pp.167-175
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• 2006

Building accurate corporate bankruptcy prediction models has been one of the most important research issues in finance. Recently, support vector machines (SVMs) are popularly applied to bankruptcy prediction because of its many strong points. However, in order to use SVM, a modeler should determine several factors by heuristics, which hinders from obtaining accurate prediction results by using SVM. As a result, some researchers have tried to optimize these factors, especially the feature subset and kernel parameters of SVM But, there have been no studies that have attempted to determine appropriate instance subset of SVM, although it may improve the performance by eliminating distorted cases. Thus in the study, we propose the simultaneous optimization of the instance selection as well as the parameters of a kernel function of SVM by using genetic algorithms (GAs). Experimental results show that our model outperforms not only conventional SVM, but also prior approaches for optimizing SVM.

• Journal of Intelligence and Information Systems
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• v.10 no.1
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• pp.109-123
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• 2004

Corporate financial distress and bankruptcy prediction is one of the major application areas of artificial neural networks (ANNs) in finance and management. ANNs have showed high prediction performance in this area, but sometimes are confronted with inconsistent and unpredictable performance for noisy data. In addition, it may not be possible to train ANN or the training task cannot be effectively carried out without data reduction when the amount of data is so large because training the large data set needs much processing time and additional costs of collecting data. Instance selection is one of popular methods for dimensionality reduction and is directly related to data reduction. Although some researchers have addressed the need for instance selection in instance-based learning algorithms, there is little research on instance selection for ANN. This study proposes a genetic algorithm (GA) approach to instance selection in ANN for bankruptcy prediction. In this study, we use ANN supported by the GA to optimize the connection weights between layers and select relevant instances. It is expected that the globally evolved weights mitigate the well-known limitations of gradient descent algorithm of backpropagation algorithm. In addition, genetically selected instances will shorten the learning time and enhance prediction performance. This study will compare the proposed model with other major data mining techniques. Experimental results show that the GA approach is a promising method for instance selection in ANN.

• Proceedings of the Korean Institute of Intelligent Systems Conference
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• 2007.11a
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• pp.283-286
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• 2007

This paper proposes a genetic algorithm (GA) approach to instance selection in case-based reasoning (CBR) for the prediction of Korea Stock Price Index (KOSPI). CBR has been widely used in various areas because of its convenience and strength in complex problem solving. Nonetheless, compared to other machine learning techniques, CBR has been criticized because of its low prediction accuracy. Generally, in order to obtain successful results from CBR, effective retrieval of useful prior cases for the given problem is essential. However, designing a good matching and retrieval mechanism for CBR systems is still a controversial research issue. In this paper, the GA optimizes simultaneously feature weights and a selection task for relevant instances for achieving good matching and retrieval in a CBR system. This study applies the proposed model to stock market analysis. Experimental results show that the GA approach is a promising method for instance selection in CBR.

• Journal of information and communication convergence engineering
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• v.3 no.4
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• pp.209-212
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• 2005

This study proposes hybrid case-based reasoning and genetic algorithms model for customer classification. In this study, vertical and horizontal dimensions of the research data are reduced through integrated feature and instance selection process using genetic algorithms. We applied the proposed model to customer classification model which utilizes customers' demographic characteristics as inputs to predict their buying behavior for the specific product. Experimental results show that the proposed model may improve the classification accuracy and outperform various optimization models of typical CBR system.

• Journal of Intelligence and Information Systems
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• v.17 no.4
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• pp.241-254
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• 2011

Financial time-series forecasting is one of the most important issues because it is essential for the risk management of financial institutions. Therefore, researchers have tried to forecast financial time-series using various data mining techniques such as regression, artificial neural networks, decision trees, k-nearest neighbor etc. Recently, support vector machines (SVMs) are popularly applied to this research area because they have advantages that they don't require huge training data and have low possibility of overfitting. However, a user must determine several design factors by heuristics in order to use SVM. For example, the selection of appropriate kernel function and its parameters and proper feature subset selection are major design factors of SVM. Other than these factors, the proper selection of instance subset may also improve the forecasting performance of SVM by eliminating irrelevant and distorting training instances. Nonetheless, there have been few studies that have applied instance selection to SVM, especially in the domain of stock market prediction. Instance selection tries to choose proper instance subsets from original training data. It may be considered as a method of knowledge refinement and it maintains the instance-base. This study proposes the novel instance selection algorithm for SVMs. The proposed technique in this study uses genetic algorithm (GA) to optimize instance selection process with parameter optimization simultaneously. We call the model as ISVM (SVM with Instance selection) in this study. Experiments on stock market data are implemented using ISVM. In this study, the GA searches for optimal or near-optimal values of kernel parameters and relevant instances for SVMs. This study needs two sets of parameters in chromosomes in GA setting : The codes for kernel parameters and for instance selection. For the controlling parameters of the GA search, the population size is set at 50 organisms and the value of the crossover rate is set at 0.7 while the mutation rate is 0.1. As the stopping condition, 50 generations are permitted. The application data used in this study consists of technical indicators and the direction of change in the daily Korea stock price index (KOSPI). The total number of samples is 2218 trading days. We separate the whole data into three subsets as training, test, hold-out data set. The number of data in each subset is 1056, 581, 581 respectively. This study compares ISVM to several comparative models including logistic regression (logit), backpropagation neural networks (ANN), nearest neighbor (1-NN), conventional SVM (SVM) and SVM with the optimized parameters (PSVM). In especial, PSVM uses optimized kernel parameters by the genetic algorithm. The experimental results show that ISVM outperforms 1-NN by 15.32%, ANN by 6.89%, Logit and SVM by 5.34%, and PSVM by 4.82% for the holdout data. For ISVM, only 556 data from 1056 original training data are used to produce the result. In addition, the two-sample test for proportions is used to examine whether ISVM significantly outperforms other comparative models. The results indicate that ISVM outperforms ANN and 1-NN at the 1% statistical significance level. In addition, ISVM performs better than Logit, SVM and PSVM at the 5% statistical significance level.