Between Nonlinearities, Complexity, and Noises: An Application on Portfolio Selection Using Kernel Principal Component Analysis

Financial Network Analysis on the Performance of Companies Using Integrated Entropy–DEMATEL–TOPSIS Model

In this paper, we propose a multi-criteria decision making (MCDM) model by integrating the entropy–DEMATEL with TOPSIS model to analyze the causal relationship of financial ratios towards the financial performance of the companies. The proposed model is illustrated using the financial data of the companies of Dow Jones Industrial Average (DJIA). The financial network analysis using entropy–DEMATEL shows that the financial ratios such as debt to equity ratio (DER) and return on equity (ROE) are classified into the cause criteria group, whereas current ratio (CR), earnings per share (EPS), return on asset (ROA) and debt to assets ratio (DAR) are categorized into the effect criteria group. The top three most influential financial ratios are ROE, CR and DER. The significance of this paper is to determine the causal relationship of financial network towards the financial performance of the companies with the proposed entropy–DEMATEL–TOPSIS model. The ranking identification of the companies in this study is beneficial to the investors to select the companies with good performance in portfolio investment. The proposed model has been applied and validated in the portfolio investment using a mean-variance model based on the selection of companies with good performance. The results show that the proposed model is able to generate higher mean return than the benchmark DJIA index at minimum risk. However, short sale is not allowed for the applicability of the proposed model in portfolio investment.

Ventilation Diagnosis of Angle Grinder Using Thermal Imaging

The paper presents an analysis and classification method to evaluate the working condition of angle grinders by means of infrared (IR) thermography and IR image processing. An innovative method called BCAoMID-F (Binarized Common Areas of Maximum Image Differences—Fusion) is proposed in this paper. This method is used to extract features of thermal images of three angle grinders. The computed features are 1-element or 256-element vectors. Feature vectors are the sum of pixels of matrix V or PCA of matrix V or histogram of matrix V. Three different cases of thermal images were considered: healthy angle grinder, angle grinder with 1 blocked air inlet, angle grinder with 2 blocked air inlets. The classification of feature vectors was carried out using two classifiers: Support Vector Machine and Nearest Neighbor. Total recognition efficiency for 3 classes (TR_AG) was in the range of 98.5–100%. The presented technique is efficient for fault diagnosis of electrical devices and electric power tools.