Modelling A.I. in Economics

Is LON:DGE Stock Buy or Sell? (Stock Forecast)

Machine Learning refers to a concept in which a machine has been programmed to learn specific patterns from historical data using powerful algorithms and make predictions in future based on the patterns it learnt. Machine learning is a branch of Artificial Intelligence (AI), the term proposed in 1959 by Arthur Samuel who defined it as the ability of computers or machines to learn new rules and concepts from data without being explicitly programmed. We evaluate DIAGEO PLC prediction models with Modular Neural Network (Market Direction Analysis) and Chi-Square1,2,3,4 and conclude that the LON:DGE stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy LON:DGE stock.


Keywords: LON:DGE, DIAGEO PLC, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. Investment Risk
  2. What is a prediction confidence?
  3. How useful are statistical predictions?

LON:DGE Target Price Prediction Modeling Methodology

Stocks are possibly the most popular financial instrument invented for building wealth and are the centerpiece of any investment portfolio. The advances in trading technology has opened up the markets so that nowadays nearly anybody can own stocks. From last few decades, there seen explosive increase in the average person's interest for stock market. In a financially explosive market, as the stock market, it is important to have a very accurate prediction of a future trend. Because of the financial crisis and recording profits, it is compulsory to have a secure prediction of the values of the stocks. Predicting a non-linear signal requires progressive algorithms of machine learning with help of Artificial Intelligence (AI). We consider DIAGEO PLC Stock Decision Process with Chi-Square where A is the set of discrete actions of LON:DGE 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(Chi-Square)5,6,7= p a 1 p a 2 p 1 n p j 1 p j 2 p j n p k 1 p k 2 p k n p n 1 p n 2 p n n X R(Modular Neural Network (Market Direction Analysis)) X S(n):→ (n+8 weeks) i = 1 n a i

n:Time series to forecast

p:Price signals of LON:DGE 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?

LON:DGE Stock Forecast (Buy or Sell) for (n+8 weeks)

Sample Set: Neural Network
Stock/Index: LON:DGE DIAGEO PLC
Time series to forecast n: 12 Sep 2022 for (n+8 weeks)

According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy LON:DGE 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

DIAGEO PLC assigned short-term Ba3 & long-term B1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Market Direction Analysis) with Chi-Square1,2,3,4 and conclude that the LON:DGE stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy LON:DGE stock.

Financial State Forecast for LON:DGE Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba3B1
Operational Risk 5589
Market Risk8562
Technical Analysis5852
Fundamental Analysis5049
Risk Unsystematic8340

Prediction Confidence Score

Trust metric by Neural Network: 83 out of 100 with 601 signals.

References

  1. Breiman L. 1993. Better subset selection using the non-negative garotte. Tech. Rep., Univ. Calif., Berkeley
  2. Friedberg R, Tibshirani J, Athey S, Wager S. 2018. Local linear forests. arXiv:1807.11408 [stat.ML]
  3. Dimakopoulou M, Zhou Z, Athey S, Imbens G. 2018. Balanced linear contextual bandits. arXiv:1812.06227 [cs.LG]
  4. Cortes C, Vapnik V. 1995. Support-vector networks. Mach. Learn. 20:273–97
  5. G. Theocharous and A. Hallak. Lifetime value marketing using reinforcement learning. RLDM 2013, page 19, 2013
  6. Bai J, Ng S. 2017. Principal components and regularized estimation of factor models. arXiv:1708.08137 [stat.ME]
  7. Tibshirani R. 1996. Regression shrinkage and selection via the lasso. J. R. Stat. Soc. B 58:267–88
Frequently Asked QuestionsQ: What is the prediction methodology for LON:DGE stock?
A: LON:DGE stock prediction methodology: We evaluate the prediction models Modular Neural Network (Market Direction Analysis) and Chi-Square
Q: Is LON:DGE stock a buy or sell?
A: The dominant strategy among neural network is to Buy LON:DGE Stock.
Q: Is DIAGEO PLC stock a good investment?
A: The consensus rating for DIAGEO PLC is Buy and assigned short-term Ba3 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of LON:DGE stock?
A: The consensus rating for LON:DGE is Buy.
Q: What is the prediction period for LON:DGE stock?
A: The prediction period for LON:DGE is (n+8 weeks)

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