How Is Machine Learning Used in Trading? (NEU Stock Forecast) (Forecast)

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 evaluate NewMarket Corporation prediction models with Active Learning (ML) and Multiple Regression^1,2,3,4 and conclude that the NEU stock is predictable in the short/long term. According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Hold NEU stock.

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

Key Points

1. What is the best way to predict stock prices?
2. Trust metric by Neural Network
3. Nash Equilibria

NEU Target Price Prediction Modeling Methodology

Predicting stock index with traditional time series analysis has proven to be difficult an Artificial Neural network may be suitable for the task. A Neural Network has the ability to extract useful information from large set of data. This paper presents a review of literature application of Artificial Neural Network for stock market predictions and from this literature found that Artificial Neural Network is very useful for predicting world stock markets. We consider NewMarket Corporation Stock Decision Process with Multiple Regression where A is the set of discrete actions of NEU 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(Multiple 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(Active Learning (ML)) X S(n):→ (n+16 weeks) $\begin{array}{l}\int e^x\mathrm{rx}\end{array}$

n:Time series to forecast

p:Price signals of NEU 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?

NEU Stock Forecast (Buy or Sell) for (n+16 weeks)

Sample Set: Neural Network
Stock/Index: NEU NewMarket Corporation
Time series to forecast n: 16 Sep 2022 for (n+16 weeks)

According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Hold NEU 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

NewMarket Corporation assigned short-term B1 & long-term B2 forecasted stock rating. We evaluate the prediction models Active Learning (ML) with Multiple Regression^1,2,3,4 and conclude that the NEU stock is predictable in the short/long term. According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Hold NEU stock.

Financial State Forecast for NEU Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	B1	B2
Operational Risk	49	63
Market Risk	50	40
Technical Analysis	76	48
Fundamental Analysis	42	68
Risk Unsystematic	83	32

Prediction Confidence Score

Trust metric by Neural Network: 75 out of 100 with 606 signals.

References

1. Byron, R. P. O. Ashenfelter (1995), "Predicting the quality of an unborn grange," Economic Record, 71, 40–53.
2. V. Mnih, A. P. Badia, M. Mirza, A. Graves, T. P. Lillicrap, T. Harley, D. Silver, and K. Kavukcuoglu. Asynchronous methods for deep reinforcement learning. In Proceedings of the 33nd International Conference on Machine Learning, ICML 2016, New York City, NY, USA, June 19-24, 2016, pages 1928–1937, 2016
3. Arora S, Li Y, Liang Y, Ma T. 2016. RAND-WALK: a latent variable model approach to word embeddings. Trans. Assoc. Comput. Linguist. 4:385–99
4. R. Sutton and A. Barto. Introduction to reinforcement learning. MIT Press, 1998
5. Athey S, Mobius MM, Pál J. 2017c. The impact of aggregators on internet news consumption. Unpublished manuscript, Grad. School Bus., Stanford Univ., Stanford, CA
6. Li L, Chu W, Langford J, Moon T, Wang X. 2012. An unbiased offline evaluation of contextual bandit algo- rithms with generalized linear models. In Proceedings of 4th ACM International Conference on Web Search and Data Mining, pp. 297–306. New York: ACM
7. Athey S, Tibshirani J, Wager S. 2016b. Generalized random forests. arXiv:1610.01271 [stat.ME]

Frequently Asked Questions

Q: What is the prediction methodology for NEU stock?
A: NEU stock prediction methodology: We evaluate the prediction models Active Learning (ML) and Multiple Regression
Q: Is NEU stock a buy or sell?
A: The dominant strategy among neural network is to Hold NEU Stock.
Q: Is NewMarket Corporation stock a good investment?
A: The consensus rating for NewMarket Corporation is Hold and assigned short-term B1 & long-term B2 forecasted stock rating.
Q: What is the consensus rating of NEU stock?
A: The consensus rating for NEU is Hold.
Q: What is the prediction period for NEU stock?
A: The prediction period for NEU is (n+16 weeks)

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