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Data mining is the process of uncovering patterns and finding anomalies and relationships in large datasets that can be used to make predictions about future trends. The main purpose of data mining is to extract valuable information from available data.

Data mining is considered an interdisciplinary field that joins the techniques of computer science and statisticsBasic Statistics Concepts for FinanceA solid understanding of statistics is crucially important in helping us better understand finance. Moreover, statistics concepts can help investors monitor. Note that the term data mining is a misnomer. It is primarily concerned with discovering patterns and anomalies within datasets, but it is not related to the extraction of the data itself.

Data mining offers many applications in business. For example, the establishment of proper data (mining) processes can help a company to decrease its costs, increase revenuesRevenueRevenue is the value of all sales of goods and services recognized by a company in a period. Revenue (also referred to as Sales or Income), or derive insights from the behavior and practices of its customers. Certainly, it plays a vital role in the business decision-making process nowadays.

Data mining is also actively utilized in finance. For instance, relevant techniques allow users to determine and assess the factors that influence the price fluctuations of financial securitiesMarketable SecuritiesMarketable securities are unrestricted short-term financialinstrumentsthat are issued either forequity securities or for debt securities of a publicly listed company. Theissuing company creates theseinstruments for the express purpose of raising funds to further finance business activities andexpansion..

The field is rapidly evolving. New data emerges at enormously fast speeds while technological advancements allow for more efficient ways to solve existing problems. In addition, developments in the areas of artificial intelligence and machine learning provide new paths to precision and efficiency in the field.

Generally, the process can be divided into the following steps:

The most commonly used techniques in the field include:

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Data Mining - Definition, Applications, and Techniques