Modelling A.I. in Economics

Can stock prices be predicted? (LON:LIKE Stock Forecast) (Forecast)

The success of portfolio construction depends primarily on the future performance of stock markets. Recent developments in machine learning have brought significant opportunities to incorporate prediction theory into portfolio selection. However, many studies show that a single prediction model is insufficient to achieve very accurate predictions and affluent returns. In this paper, a novel portfolio construction approach is developed using a hybrid model based on machine learning for stock prediction. We evaluate LIKEWISE GROUP PLC prediction models with Modular Neural Network (DNN Layer) and Sign Test1,2,3,4 and conclude that the LON:LIKE 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 Sell LON:LIKE stock.


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

Key Points

  1. Can we predict stock market using machine learning?
  2. What is a prediction confidence?
  3. Reaction Function

LON:LIKE Target Price Prediction Modeling Methodology

In this paper we investigate ways to use prior knowledge and neural networks to improve multivariate prediction ability. Daily stock prices are predicted as a complicated real-world problem, taking non-numerical factors such as political and international events are into account. We have studied types of prior knowledge which are difficult to insert into initial network structures or to represent in the form of error measurements. We consider LIKEWISE GROUP PLC Stock Decision Process with Sign Test where A is the set of discrete actions of LON:LIKE 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(Sign Test)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 (DNN Layer)) X S(n):→ (n+16 weeks) R = 1 0 0 0 1 0 0 0 1

n:Time series to forecast

p:Price signals of LON:LIKE 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:LIKE Stock Forecast (Buy or Sell) for (n+16 weeks)

Sample Set: Neural Network
Stock/Index: LON:LIKE LIKEWISE GROUP PLC
Time series to forecast n: 27 Oct 2022 for (n+16 weeks)

According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Sell LON:LIKE 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%

Adjusted IFRS* Prediction Methods for LIKEWISE GROUP PLC

  1. A firm commitment to acquire a business in a business combination cannot be a hedged item, except for foreign currency risk, because the other risks being hedged cannot be specifically identified and measured. Those other risks are general business risks.
  2. For the avoidance of doubt, the effects of replacing the original counterparty with a clearing counterparty and making the associated changes as described in paragraph 6.5.6 shall be reflected in the measurement of the hedging instrument and therefore in the assessment of hedge effectiveness and the measurement of hedge effectiveness
  3. An entity shall assess separately whether each subgroup meets the requirements in paragraph 6.6.1 to be an eligible hedged item. If any subgroup fails to meet the requirements in paragraph 6.6.1, the entity shall discontinue hedge accounting prospectively for the hedging relationship in its entirety. An entity also shall apply the requirements in paragraphs 6.5.8 and 6.5.11 to account for ineffectiveness related to the hedging relationship in its entirety.
  4. It would not be acceptable to designate only some of the financial assets and financial liabilities giving rise to the inconsistency as at fair value through profit or loss if to do so would not eliminate or significantly reduce the inconsistency and would therefore not result in more relevant information. However, it would be acceptable to designate only some of a number of similar financial assets or similar financial liabilities if doing so achieves a significant reduction (and possibly a greater reduction than other allowable designations) in the inconsistency. For example, assume an entity has a number of similar financial liabilities that sum to CU100 and a number of similar financial assets that sum to CU50 but are measured on a different basis. The entity may significantly reduce the measurement inconsistency by designating at initial recognition all of the assets but only some of the liabilities (for example, individual liabilities with a combined total of CU45) as at fair value through profit or loss. However, because designation as at fair value through profit or loss can be applied only to the whole of a financial instrument, the entity in this example must designate one or more liabilities in their entirety. It could not designate either a component of a liability (eg changes in value attributable to only one risk, such as changes in a benchmark interest rate) or a proportion (ie percentage) of a liability.

*International Financial Reporting Standards (IFRS) are a set of accounting rules for the financial statements of public companies that are intended to make them consistent, transparent, and easily comparable around the world.

Conclusions

LIKEWISE GROUP PLC assigned short-term B3 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (DNN Layer) with Sign Test1,2,3,4 and conclude that the LON:LIKE 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 Sell LON:LIKE stock.

Financial State Forecast for LON:LIKE LIKEWISE GROUP PLC Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B3Ba3
Operational Risk 4288
Market Risk3355
Technical Analysis3089
Fundamental Analysis7563
Risk Unsystematic6232

Prediction Confidence Score

Trust metric by Neural Network: 80 out of 100 with 870 signals.

References

  1. Athey S, Tibshirani J, Wager S. 2016b. Generalized random forests. arXiv:1610.01271 [stat.ME]
  2. Friedberg R, Tibshirani J, Athey S, Wager S. 2018. Local linear forests. arXiv:1807.11408 [stat.ML]
  3. Y. Chow and M. Ghavamzadeh. Algorithms for CVaR optimization in MDPs. In Advances in Neural Infor- mation Processing Systems, pages 3509–3517, 2014.
  4. M. Benaim, J. Hofbauer, and S. Sorin. Stochastic approximations and differential inclusions, Part II: Appli- cations. Mathematics of Operations Research, 31(4):673–695, 2006
  5. Burgess, D. F. (1975), "Duality theory and pitfalls in the specification of technologies," Journal of Econometrics, 3, 105–121.
  6. J. Ott. A Markov decision model for a surveillance application and risk-sensitive Markov decision processes. PhD thesis, Karlsruhe Institute of Technology, 2010.
  7. 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
Frequently Asked QuestionsQ: What is the prediction methodology for LON:LIKE stock?
A: LON:LIKE stock prediction methodology: We evaluate the prediction models Modular Neural Network (DNN Layer) and Sign Test
Q: Is LON:LIKE stock a buy or sell?
A: The dominant strategy among neural network is to Sell LON:LIKE Stock.
Q: Is LIKEWISE GROUP PLC stock a good investment?
A: The consensus rating for LIKEWISE GROUP PLC is Sell and assigned short-term B3 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of LON:LIKE stock?
A: The consensus rating for LON:LIKE is Sell.
Q: What is the prediction period for LON:LIKE stock?
A: The prediction period for LON:LIKE is (n+16 weeks)

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