Can neural networks predict stock market? (OMX Stockholm 30 Index Stock Forecast)

Recurrent Neural Networks (RNNs) is a sub type of neural networks that use feedback connections. Several types of RNN models are used in predicting financial time series. This study was conducted to develop models to predict daily stock prices based on Recurrent Neural Network (RNN) Approach and to measure the accuracy of the models developed and identify the shortcomings of the models if present. We evaluate OMX Stockholm 30 Index prediction models with Modular Neural Network (DNN Layer) and Multiple Regression^1,2,3,4 and conclude that the OMX Stockholm 30 Index stock is predictable in the short/long term. According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Buy OMX Stockholm 30 Index stock.

Keywords: OMX Stockholm 30 Index, OMX Stockholm 30 Index, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

1. How accurate is machine learning in stock market?
2. Can we predict stock market using machine learning?
3. Trading Interaction

OMX Stockholm 30 Index Target Price Prediction Modeling Methodology

This paper tries to address the problem of stock market prediction leveraging artificial intelligence (AI) strategies. The stock market prediction can be modeled based on two principal analyses called technical and fundamental. In the technical analysis approach, the regression machine learning (ML) algorithms are employed to predict the stock price trend at the end of a business day based on the historical price data. In contrast, in the fundamental analysis, the classification ML algorithms are applied to classify the public sentiment based on news and social media. We consider OMX Stockholm 30 Index Stock Decision Process with Multiple Regression where A is the set of discrete actions of OMX Stockholm 30 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(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 (DNN Layer)) X S(n):→ (n+3 month) $\overrightarrow{R}=\left(r_1,r_2,r_3\right)$

n:Time series to forecast

p:Price signals of OMX Stockholm 30 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?

OMX Stockholm 30 Index Stock Forecast (Buy or Sell) for (n+3 month)

Sample Set: Neural Network
Stock/Index: OMX Stockholm 30 Index OMX Stockholm 30 Index
Time series to forecast n: 07 Oct 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Buy OMX Stockholm 30 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

OMX Stockholm 30 Index assigned short-term B2 & long-term Baa2 forecasted stock rating. We evaluate the prediction models Modular Neural Network (DNN Layer) with Multiple Regression^1,2,3,4 and conclude that the OMX Stockholm 30 Index stock is predictable in the short/long term. According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Buy OMX Stockholm 30 Index stock.

Financial State Forecast for OMX Stockholm 30 Index Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	B2	Baa2
Operational Risk	46	85
Market Risk	79	60
Technical Analysis	35	86
Fundamental Analysis	47	63
Risk Unsystematic	62	88

Prediction Confidence Score

Trust metric by Neural Network: 87 out of 100 with 748 signals.

References

1. Batchelor, R. P. Dua (1993), "Survey vs ARCH measures of inflation uncertainty," Oxford Bulletin of Economics Statistics, 55, 341–353.
2. Mikolov T, Sutskever I, Chen K, Corrado GS, Dean J. 2013b. Distributed representations of words and phrases and their compositionality. In Advances in Neural Information Processing Systems, Vol. 26, ed. Z Ghahramani, M Welling, C Cortes, ND Lawrence, KQ Weinberger, pp. 3111–19. San Diego, CA: Neural Inf. Process. Syst. Found.
3. V. Borkar. Q-learning for risk-sensitive control. Mathematics of Operations Research, 27:294–311, 2002.
4. A. Tamar, D. Di Castro, and S. Mannor. Policy gradients with variance related risk criteria. In Proceedings of the Twenty-Ninth International Conference on Machine Learning, pages 387–396, 2012.
5. Firth JR. 1957. A synopsis of linguistic theory 1930–1955. In Studies in Linguistic Analysis (Special Volume of the Philological Society), ed. JR Firth, pp. 1–32. Oxford, UK: Blackwell
6. R. Howard and J. Matheson. Risk sensitive Markov decision processes. Management Science, 18(7):356– 369, 1972
7. S. J. Russell and A. Zimdars. Q-decomposition for reinforcement learning agents. In Machine Learning, Proceedings of the Twentieth International Conference (ICML 2003), August 21-24, 2003, Washington, DC, USA, pages 656–663, 2003.

Frequently Asked Questions

Q: What is the prediction methodology for OMX Stockholm 30 Index stock?
A: OMX Stockholm 30 Index stock prediction methodology: We evaluate the prediction models Modular Neural Network (DNN Layer) and Multiple Regression
Q: Is OMX Stockholm 30 Index stock a buy or sell?
A: The dominant strategy among neural network is to Buy OMX Stockholm 30 Index Stock.
Q: Is OMX Stockholm 30 Index stock a good investment?
A: The consensus rating for OMX Stockholm 30 Index is Buy and assigned short-term B2 & long-term Baa2 forecasted stock rating.
Q: What is the consensus rating of OMX Stockholm 30 Index stock?
A: The consensus rating for OMX Stockholm 30 Index is Buy.
Q: What is the prediction period for OMX Stockholm 30 Index stock?
A: The prediction period for OMX Stockholm 30 Index is (n+3 month)

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