Can neural networks predict stock market? (ES Stock Forecast)

Stock market or Share market is one of the most complicated and sophisticated way to do business. Small ownerships, brokerage corporations, banking sector, all depend on this very body to make revenue and divide risks; a very complicated model. However, this paper proposes to use machine learning algorithm to predict the future stock price for exchange by using open source libraries and preexisting algorithms to help make this unpredictable format of business a little more predictable. We evaluate Eversource prediction models with Modular Neural Network (DNN Layer) and Chi-Square^1,2,3,4 and conclude that the ES 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 Hold ES stock.

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

Key Points

1. Trading Signals
2. Reaction Function
3. Dominated Move

ES 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 Eversource Stock Decision Process with Chi-Square where A is the set of discrete actions of ES 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= $\begin{array}{cccc}{p}_{\mathrm{a}1}& p_{\mathrm{a}2}& \dots & p_{1n}\\ & ⋮\\ p_{j1}& p_{j2}& \dots & p_{jn}\\ & ⋮\\ p_{k1}& p_{k2}& \dots & p_{kn}\\ & ⋮\\ p_{n1}& p_{n2}& \dots & p_{nn}\end{array}$ X R(Modular Neural Network (DNN Layer)) X S(n):→ (n+8 weeks) $\sum _{i=1}^n\left(a_i\right)$

n:Time series to forecast

p:Price signals of ES 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?

ES Stock Forecast (Buy or Sell) for (n+8 weeks)

Sample Set: Neural Network
Stock/Index: ES Eversource
Time series to forecast n: 15 Oct 2022 for (n+8 weeks)

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

Eversource assigned short-term B2 & long-term Ba2 forecasted stock rating. We evaluate the prediction models Modular Neural Network (DNN Layer) with Chi-Square^1,2,3,4 and conclude that the ES 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 Hold ES stock.

Financial State Forecast for ES Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	B2	Ba2
Operational Risk	88	65
Market Risk	39	88
Technical Analysis	45	64
Fundamental Analysis	37	60
Risk Unsystematic	63	63

Prediction Confidence Score

Trust metric by Neural Network: 93 out of 100 with 714 signals.

References

1. Chow, G. C. (1960), "Tests of equality between sets of coefficients in two linear regressions," Econometrica, 28, 591–605.
2. Breiman L. 2001a. Random forests. Mach. Learn. 45:5–32
3. F. A. Oliehoek and C. Amato. A Concise Introduction to Decentralized POMDPs. SpringerBriefs in Intelligent Systems. Springer, 2016
4. Knox SW. 2018. Machine Learning: A Concise Introduction. Hoboken, NJ: Wiley
5. Bickel P, Klaassen C, Ritov Y, Wellner J. 1998. Efficient and Adaptive Estimation for Semiparametric Models. Berlin: Springer
6. Banerjee, A., J. J. Dolado, J. W. Galbraith, D. F. Hendry (1993), Co-integration, Error-correction, and the Econometric Analysis of Non-stationary Data. Oxford: Oxford University Press.
7. Bengio Y, Schwenk H, Senécal JS, Morin F, Gauvain JL. 2006. Neural probabilistic language models. In Innovations in Machine Learning: Theory and Applications, ed. DE Holmes, pp. 137–86. Berlin: Springer

Frequently Asked Questions

Q: What is the prediction methodology for ES stock?
A: ES stock prediction methodology: We evaluate the prediction models Modular Neural Network (DNN Layer) and Chi-Square
Q: Is ES stock a buy or sell?
A: The dominant strategy among neural network is to Hold ES Stock.
Q: Is Eversource stock a good investment?
A: The consensus rating for Eversource is Hold and assigned short-term B2 & long-term Ba2 forecasted stock rating.
Q: What is the consensus rating of ES stock?
A: The consensus rating for ES is Hold.
Q: What is the prediction period for ES stock?
A: The prediction period for ES is (n+8 weeks)

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