Can stock prices be predicted? (DAX Index Stock Forecast)

In this paper we investigate ways to use prior knowledge and neural networks to improve multivariate prediction ability. Daily stock prices are predicted as a complicated real-world problem, taking non-numerical factors such as political and international events are into account. We have studied types of prior knowledge which are difficult to insert into initial network structures or to represent in the form of error measurements. We evaluate DAX Index prediction models with Modular Neural Network (Social Media Sentiment Analysis) and Polynomial Regression^1,2,3,4 and conclude that the DAX Index stock is predictable in the short/long term. According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold DAX Index stock.

Keywords: DAX Index, DAX Index, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

1. What are the most successful trading algorithms?
2. Nash Equilibria
3. How do predictive algorithms actually work?

DAX Index Target Price Prediction Modeling Methodology

In this paper, we propose a robust and novel hybrid model for prediction of stock returns. The proposed model is constituted of two linear models: autoregressive moving average model, exponential smoothing model and a non-linear model: recurrent neural network. Training data for recurrent neural network is generated by a new regression model. Recurrent neural network produces satisfactory predictions as compared to linear models. With the goal to further improve the accuracy of predictions, the proposed hybrid prediction model merges predictions obtained from these three prediction based models. We consider DAX Index Stock Decision Process with Polynomial Regression where A is the set of discrete actions of DAX Index stock holders, F is the set of discrete states, P : S × F × S → R is the transition probability distribution, R : S × F → R is the reaction function, and γ ∈ [0, 1] is a move factor for expectation.^1,2,3,4

F(Polynomial Regression)^5,6,7= $\begin{array}{cccc}{p}_{\mathrm{a}1}& p_{\mathrm{a}2}& \dots & p_{1n}\\ & ⋮\\ p_{j1}& p_{j2}& \dots & p_{jn}\\ & ⋮\\ p_{k1}& p_{k2}& \dots & p_{kn}\\ & ⋮\\ p_{n1}& p_{n2}& \dots & p_{nn}\end{array}$ X R(Modular Neural Network (Social Media Sentiment Analysis)) X S(n):→ (n+6 month) $R=\left(\begin{array}{ccc}1& 0& 0\\ 0& 1& 0\\ 0& 0& 1\end{array}\right)$

n:Time series to forecast

p:Price signals of DAX Index stock

j:Nash equilibria

k:Dominated move

a:Best response for target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do AC Investment Research machine learning (predictive) algorithms actually work?

DAX Index Stock Forecast (Buy or Sell) for (n+6 month)

Sample Set: Neural Network
Stock/Index: DAX Index DAX Index
Time series to forecast n: 11 Sep 2022 for (n+6 month)

According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold DAX Index stock.

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Yellow to Green): *Technical Analysis%

Conclusions

DAX Index assigned short-term B1 & long-term B1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Social Media Sentiment Analysis) with Polynomial Regression^1,2,3,4 and conclude that the DAX Index stock is predictable in the short/long term. According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold DAX Index stock.

Financial State Forecast for DAX Index Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	B1	B1
Operational Risk	86	36
Market Risk	33	30
Technical Analysis	74	66
Fundamental Analysis	41	75
Risk Unsystematic	63	87

Prediction Confidence Score

Trust metric by Neural Network: 92 out of 100 with 804 signals.

References

1. C. Wu and Y. Lin. Minimizing risk models in Markov decision processes with policies depending on target values. Journal of Mathematical Analysis and Applications, 231(1):47–67, 1999
2. V. Borkar. Stochastic approximation: a dynamical systems viewpoint. Cambridge University Press, 2008
3. Armstrong, J. S. M. C. Grohman (1972), "A comparative study of methods for long-range market forecasting," Management Science, 19, 211–221.
4. Chernozhukov V, Escanciano JC, Ichimura H, Newey WK. 2016b. Locally robust semiparametric estimation. arXiv:1608.00033 [math.ST]
5. J. Filar, L. Kallenberg, and H. Lee. Variance-penalized Markov decision processes. Mathematics of Opera- tions Research, 14(1):147–161, 1989
6. M. Petrik and D. Subramanian. An approximate solution method for large risk-averse Markov decision processes. In Proceedings of the 28th International Conference on Uncertainty in Artificial Intelligence, 2012.
7. Matzkin RL. 1994. Restrictions of economic theory in nonparametric methods. In Handbook of Econometrics, Vol. 4, ed. R Engle, D McFadden, pp. 2523–58. Amsterdam: Elsevier

Frequently Asked Questions

Q: What is the prediction methodology for DAX Index stock?
A: DAX Index stock prediction methodology: We evaluate the prediction models Modular Neural Network (Social Media Sentiment Analysis) and Polynomial Regression
Q: Is DAX Index stock a buy or sell?
A: The dominant strategy among neural network is to Hold DAX Index Stock.
Q: Is DAX Index stock a good investment?
A: The consensus rating for DAX Index is Hold and assigned short-term B1 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of DAX Index stock?
A: The consensus rating for DAX Index is Hold.
Q: What is the prediction period for DAX Index stock?
A: The prediction period for DAX Index is (n+6 month)

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