Machine Learning stock prediction: PSX Stock Prediction

Neural networks, as an intelligent data mining method, have been used in many different challenging pattern recognition problems such as stock market prediction. However, there is no formal method to determine the optimal neural network for prediction purpose in the literature. In this paper, two kinds of neural networks, a feed forward multi layer Perceptron (MLP) and an Elman recurrent network, are used to predict a company's stock value based on its stock share value history. We evaluate Phillips 66 prediction models with Modular Neural Network (Financial Sentiment Analysis) and Multiple Regression^1,2,3,4 and conclude that the PSX 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 PSX stock.

Keywords: PSX, Phillips 66, 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. Fundemental Analysis with Algorithmic Trading
3. Can we predict stock market using machine learning?

PSX Target Price Prediction Modeling Methodology

Predictions on stock market prices are a great challenge due to the fact that it is an immensely complex, chaotic and dynamic environment. There are many studies from various areas aiming to take on that challenge and Machine Learning approaches have been the focus of many of them. There are many examples of Machine Learning algorithms been able to reach satisfactory results when doing that type of prediction. This article studies the usage of LSTM networks on that scenario, to predict future trends of stock prices based on the price history, alongside with technical analysis indicators. We consider Phillips 66 Stock Decision Process with Multiple Regression where A is the set of discrete actions of PSX 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(Modular Neural Network (Financial Sentiment Analysis)) X S(n):→ (n+6 month) $\sum _{i=1}^n\left(a_i\right)$

n:Time series to forecast

p:Price signals of PSX 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?

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

Sample Set: Neural Network
Stock/Index: PSX Phillips 66
Time series to forecast n: 14 Sep 2022 for (n+6 month)

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

Phillips 66 assigned short-term B1 & long-term B1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Financial Sentiment Analysis) with Multiple Regression^1,2,3,4 and conclude that the PSX 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 PSX stock.

Financial State Forecast for PSX Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	B1	B1
Operational Risk	83	60
Market Risk	46	33
Technical Analysis	75	41
Fundamental Analysis	57	89
Risk Unsystematic	46	79

Prediction Confidence Score

Trust metric by Neural Network: 83 out of 100 with 835 signals.

References

1. Sutton RS, Barto AG. 1998. Reinforcement Learning: An Introduction. Cambridge, MA: MIT Press
2. Hastie T, Tibshirani R, Tibshirani RJ. 2017. Extended comparisons of best subset selection, forward stepwise selection, and the lasso. arXiv:1707.08692 [stat.ME]
3. T. Shardlow and A. Stuart. A perturbation theory for ergodic Markov chains and application to numerical approximations. SIAM journal on numerical analysis, 37(4):1120–1137, 2000
4. M. Puterman. Markov Decision Processes: Discrete Stochastic Dynamic Programming. Wiley, New York, 1994.
5. Athey S, Bayati M, Imbens G, Zhaonan Q. 2019. Ensemble methods for causal effects in panel data settings. NBER Work. Pap. 25675
6. Dietterich TG. 2000. Ensemble methods in machine learning. In Multiple Classifier Systems: First International Workshop, Cagliari, Italy, June 21–23, pp. 1–15. Berlin: Springer
7. Chernozhukov V, Chetverikov D, Demirer M, Duflo E, Hansen C, et al. 2016a. Double machine learning for treatment and causal parameters. Tech. Rep., Cent. Microdata Methods Pract., Inst. Fiscal Stud., London

Frequently Asked Questions

Q: What is the prediction methodology for PSX stock?
A: PSX stock prediction methodology: We evaluate the prediction models Modular Neural Network (Financial Sentiment Analysis) and Multiple Regression
Q: Is PSX stock a buy or sell?
A: The dominant strategy among neural network is to Hold PSX Stock.
Q: Is Phillips 66 stock a good investment?
A: The consensus rating for Phillips 66 is Hold and assigned short-term B1 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of PSX stock?
A: The consensus rating for PSX is Hold.
Q: What is the prediction period for PSX stock?
A: The prediction period for PSX is (n+6 month)

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