Transformers Beyond Order: A Chaos-Markov-Gaussian Framework for Short-Term Sentiment Forecasting of Any Financial OHLC timeseries Data

ArXiv ID: 2506.17244 “View on arXiv”

Authors: Arif Pathan

Abstract

Short-term sentiment forecasting in financial markets (e.g., stocks, indices) is challenging due to volatility, non-linearity, and noise in OHLC (Open, High, Low, Close) data. This paper introduces a novel CMG (Chaos-Markov-Gaussian) framework that integrates chaos theory, Markov property, and Gaussian processes to improve prediction accuracy. Chaos theory captures nonlinear dynamics; the Markov chain models regime shifts; Gaussian processes add probabilistic reasoning. We enhance the framework with transformer-based deep learning models to capture temporal patterns efficiently. The CMG Framework is designed for fast, resource-efficient, and accurate forecasting of any financial instrument’s OHLC time series. Unlike traditional models that require heavy infrastructure and instrument-specific tuning, CMG reduces overhead and generalizes well. We evaluate the framework on market indices, forecasting sentiment for the next trading day’s first quarter. A comparative study against statistical, ML, and DL baselines trained on the same dataset with no feature engineering shows CMG consistently outperforms in accuracy and efficiency, making it valuable for analysts and financial institutions.

Keywords: CMG framework, chaos theory, Markov property, Gaussian processes, transformer models, General Financial Markets

Complexity vs Empirical Score

• Math Complexity: 7.0/10
• Empirical Rigor: 6.5/10
• Quadrant: Holy Grail
• Why: The paper integrates advanced mathematical paradigms (chaos theory, Markov chains, Gaussian processes) with transformer-based deep learning, indicating high mathematical complexity. It also includes a controlled comparative study on ~160 indices with a defined sentiment accuracy metric, though the absence of explicit code/datasets and reliance on claimed metrics slightly temper the empirical rigor score.

  flowchart TD
    A["Research Goal:<br>Forecast short-term sentiment<br>from OHLC financial data"] --> B["Data Input:<br>Raw OHLC Time Series"]
    B --> C["CMG Framework<br>Core Methodology"]
    C --> D["Chaos Component:<br>Captures nonlinear dynamics"]
    C --> E["Markov Component:<br>Models regime shifts"]
    C --> F["Gaussian Process:<br>Probabilistic reasoning"]
    D & E & F --> G["Transformer Integration:<br>Efficient temporal pattern capture"]
    G --> H["Outcome:<br>Outperforms baselines<br>High accuracy & efficiency"]