TRACE: Temporal Rule-Anchored Chain-of-Evidence on Knowledge Graphs for Interpretable Stock Movement Prediction

• URL: http://arxiv.org/abs/2603.12500v1
• Date: Thu, 12 Mar 2026 22:41:53 GMT
• Title: TRACE: Temporal Rule-Anchored Chain-of-Evidence on Knowledge Graphs for Interpretable Stock Movement Prediction
• Abstract summary: We present a Temporal Rule-Anchored Chain-of-Evidence (TRACE) on knowledge graphs for interpretable stock movement prediction.<n>On an S&P500 benchmark, the method achieves 55.1% accuracy, 55.7% precision, 71.5% recall, and 60.8% F1.<n>The gains stem from (i) rule-guided exploration that focuses search on economically meaningful motifs rather than arbitrary walks, and (ii) text-grounded consolidation that aggregates high-confidence, fully grounded hypotheses.
• Score: 23.985633276560844
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: We present a Temporal Rule-Anchored Chain-of-Evidence (TRACE) on knowledge graphs for interpretable stock movement prediction that unifies symbolic relational priors, dynamic graph exploration, and LLM-guided decision making in a single end-to-end pipeline. The approach performs rule-guided multi-hop exploration restricted to admissible relation sequences, grounds candidate reasoning chains in contemporaneous news, and aggregates fully grounded evidence into auditable \texttt{UP}/\texttt{DOWN} verdicts with human-readable paths connecting text and structure. On an S\&P~500 benchmark, the method achieves 55.1\% accuracy, 55.7\% precision, 71.5\% recall, and 60.8\% F1, surpassing strong baselines and improving recall and F1 over the best graph baseline under identical evaluation. The gains stem from (i) rule-guided exploration that focuses search on economically meaningful motifs rather than arbitrary walks, and (ii) text-grounded consolidation that selectively aggregates high-confidence, fully grounded hypotheses instead of uniformly pooling weak signals. Together, these choices yield higher sensitivity without sacrificing selectivity, delivering predictive lift with faithful, auditably interpretable explanations.

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