Modelling A.I. in Economics

How accurate is machine learning in stock market? (LON:DRV Stock Forecast) (Forecast)

Stock market is considered chaotic, complex, volatile and dynamic. Undoubtedly, its prediction is one of the most challenging tasks in time series forecasting. Moreover existing Artificial Neural Network (ANN) approaches fail to provide encouraging results. Meanwhile advances in machine learning have presented favourable results for speech recognition, image classification and language processing. We evaluate DRIVER GROUP PLC prediction models with Transductive Learning (ML) and Wilcoxon Sign-Rank Test1,2,3,4 and conclude that the LON:DRV 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 LON:DRV stock.


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

Key Points

  1. What are buy sell or hold recommendations?
  2. Is now good time to invest?
  3. How do predictive algorithms actually work?

LON:DRV 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 DRIVER GROUP PLC Stock Decision Process with Wilcoxon Sign-Rank Test where A is the set of discrete actions of LON:DRV 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(Wilcoxon Sign-Rank 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(Transductive Learning (ML)) X S(n):→ (n+6 month) i = 1 n s i

n:Time series to forecast

p:Price signals of LON:DRV 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:DRV Stock Forecast (Buy or Sell) for (n+6 month)

Sample Set: Neural Network
Stock/Index: LON:DRV DRIVER GROUP PLC
Time series to forecast n: 26 Oct 2022 for (n+6 month)

According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold LON:DRV 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 DRIVER GROUP PLC

  1. 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.
  2. In almost every lending transaction the creditor's instrument is ranked relative to the instruments of the debtor's other creditors. An instrument that is subordinated to other instruments may have contractual cash flows that are payments of principal and interest on the principal amount outstanding if the debtor's non-payment is a breach of contract and the holder has a contractual right to unpaid amounts of principal and interest on the principal amount outstanding even in the event of the debtor's bankruptcy. For example, a trade receivable that ranks its creditor as a general creditor would qualify as having payments of principal and interest on the principal amount outstanding. This is the case even if the debtor issued loans that are collateralised, which in the event of bankruptcy would give that loan holder priority over the claims of the general creditor in respect of the collateral but does not affect the contractual right of the general creditor to unpaid principal and other amounts due.
  3. IFRS 16, issued in January 2016, amended paragraphs 2.1, 5.5.15, B4.3.8, B5.5.34 and B5.5.46. An entity shall apply those amendments when it applies IFRS 16.
  4. Adjusting the hedge ratio by increasing the volume of the hedging instrument does not affect how the changes in the value of the hedged item are measured. The measurement of the changes in the fair value of the hedging instrument related to the previously designated volume also remains unaffected. However, from the date of rebalancing, the changes in the fair value of the hedging instrument also include the changes in the value of the additional volume of the hedging instrument. The changes are measured starting from, and by reference to, the date of rebalancing instead of the date on which the hedging relationship was designated. For example, if an entity originally hedged the price risk of a commodity using a derivative volume of 100 tonnes as the hedging instrument and added a volume of 10 tonnes on rebalancing, the hedging instrument after rebalancing would comprise a total derivative volume of 110 tonnes. The change in the fair value of the hedging instrument is the total change in the fair value of the derivatives that make up the total volume of 110 tonnes. These derivatives could (and probably would) have different critical terms, such as their forward rates, because they were entered into at different points in time (including the possibility of designating derivatives into hedging relationships after their initial recognition).

*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

DRIVER GROUP PLC assigned short-term B1 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Transductive Learning (ML) with Wilcoxon Sign-Rank Test1,2,3,4 and conclude that the LON:DRV 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 LON:DRV stock.

Financial State Forecast for LON:DRV DRIVER GROUP PLC Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B1Ba3
Operational Risk 4552
Market Risk6174
Technical Analysis8236
Fundamental Analysis4765
Risk Unsystematic6178

Prediction Confidence Score

Trust metric by Neural Network: 88 out of 100 with 544 signals.

References

  1. Tibshirani R, Hastie T. 1987. Local likelihood estimation. J. Am. Stat. Assoc. 82:559–67
  2. Cheung, Y. M.D. Chinn (1997), "Further investigation of the uncertain unit root in GNP," Journal of Business and Economic Statistics, 15, 68–73.
  3. Belsley, D. A. (1988), "Modelling and forecast reliability," International Journal of Forecasting, 4, 427–447.
  4. Imbens GW, Lemieux T. 2008. Regression discontinuity designs: a guide to practice. J. Econom. 142:615–35
  5. Zou H, Hastie T. 2005. Regularization and variable selection via the elastic net. J. R. Stat. Soc. B 67:301–20
  6. V. Borkar and R. Jain. Risk-constrained Markov decision processes. IEEE Transaction on Automatic Control, 2014
  7. J. Ott. A Markov decision model for a surveillance application and risk-sensitive Markov decision processes. PhD thesis, Karlsruhe Institute of Technology, 2010.
Frequently Asked QuestionsQ: What is the prediction methodology for LON:DRV stock?
A: LON:DRV stock prediction methodology: We evaluate the prediction models Transductive Learning (ML) and Wilcoxon Sign-Rank Test
Q: Is LON:DRV stock a buy or sell?
A: The dominant strategy among neural network is to Hold LON:DRV Stock.
Q: Is DRIVER GROUP PLC stock a good investment?
A: The consensus rating for DRIVER GROUP PLC is Hold and assigned short-term B1 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of LON:DRV stock?
A: The consensus rating for LON:DRV is Hold.
Q: What is the prediction period for LON:DRV stock?
A: The prediction period for LON:DRV is (n+6 month)

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