## Abstract

We evaluate KOSPI Index prediction models with Statistical Inference (ML) and Stepwise Regression1,2,3,4 and conclude that the KOSPI Index stock is predictable in the short/long term. According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold KOSPI Index stock.

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

## Key Points

1. Why do we need predictive models?
2. Understanding Buy, Sell, and Hold Ratings
3. Market Risk

## KOSPI Index Target Price Prediction Modeling Methodology

We consider KOSPI Index Stock Decision Process with Stepwise Regression where A is the set of discrete actions of KOSPI 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(Stepwise Regression)5,6,7= $\begin{array}{cccc}{p}_{a1}& {p}_{a2}& \dots & {p}_{1n}\\ & ⋮\\ {p}_{j1}& {p}_{j2}& \dots & {p}_{jn}\\ & ⋮\\ {p}_{k1}& {p}_{k2}& \dots & {p}_{kn}\\ & ⋮\\ {p}_{n1}& {p}_{n2}& \dots & {p}_{nn}\end{array}$ X R(Statistical Inference (ML)) X S(n):→ (n+1 year) $\begin{array}{l}\int {e}^{x}\mathrm{rx}\end{array}$

n:Time series to forecast

p:Price signals of KOSPI 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?

## KOSPI Index Stock Forecast (Buy or Sell) for (n+1 year)

Sample Set: Neural Network
Stock/Index: KOSPI Index KOSPI Index
Time series to forecast n: 01 Sep 2022 for (n+1 year)

According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold KOSPI 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

KOSPI Index assigned short-term B2 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Statistical Inference (ML) with Stepwise Regression1,2,3,4 and conclude that the KOSPI Index stock is predictable in the short/long term. According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold KOSPI Index stock.

### Financial State Forecast for KOSPI Index Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B2Ba3
Operational Risk 3967
Market Risk8561
Technical Analysis3650
Fundamental Analysis7552
Risk Unsystematic3175

### Prediction Confidence Score

Trust metric by Neural Network: 91 out of 100 with 507 signals.

## References

1. J. Harb and D. Precup. Investigating recurrence and eligibility traces in deep Q-networks. In Deep Reinforcement Learning Workshop, NIPS 2016, Barcelona, Spain, 2016.
2. M. J. Hausknecht and P. Stone. Deep recurrent Q-learning for partially observable MDPs. CoRR, abs/1507.06527, 2015
3. Athey S. 2019. The impact of machine learning on economics. In The Economics of Artificial Intelligence: An Agenda, ed. AK Agrawal, J Gans, A Goldfarb. Chicago: Univ. Chicago Press. In press
4. Tibshirani R, Hastie T. 1987. Local likelihood estimation. J. Am. Stat. Assoc. 82:559–67
5. Bell RM, Koren Y. 2007. Lessons from the Netflix prize challenge. ACM SIGKDD Explor. Newsl. 9:75–79
6. Dimakopoulou M, Zhou Z, Athey S, Imbens G. 2018. Balanced linear contextual bandits. arXiv:1812.06227 [cs.LG]
7. Athey S, Tibshirani J, Wager S. 2016b. Generalized random forests. arXiv:1610.01271 [stat.ME]
Frequently Asked QuestionsQ: What is the prediction methodology for KOSPI Index stock?
A: KOSPI Index stock prediction methodology: We evaluate the prediction models Statistical Inference (ML) and Stepwise Regression
Q: Is KOSPI Index stock a buy or sell?
A: The dominant strategy among neural network is to Hold KOSPI Index Stock.
Q: Is KOSPI Index stock a good investment?
A: The consensus rating for KOSPI Index is Hold and assigned short-term B2 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of KOSPI Index stock?
A: The consensus rating for KOSPI Index is Hold.
Q: What is the prediction period for KOSPI Index stock?
A: The prediction period for KOSPI Index is (n+1 year)