Modelling A.I. in Economics

Is AMZN stock expected to rise?

Prediction of future movement of stock prices has been a subject matter of many research work. In this work, we propose a hybrid approach for stock price prediction using machine learning and deep learning-based methods. We evaluate Amazon prediction models with Modular Neural Network (DNN Layer) and Spearman Correlation1,2,3,4 and conclude that the AMZN 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 Hold AMZN stock.


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

Key Points

  1. Prediction Modeling
  2. Trading Signals
  3. Decision Making

AMZN Target Price Prediction Modeling Methodology

Finance is one of the pioneering industries that started using Machine Learning (ML), a subset of Artificial Intelligence (AI) in the early 80s for market prediction. Since then, major firms and hedge funds have adopted machine learning for stock prediction, portfolio optimization, credit lending, stock betting, etc. In this paper, we survey all the different approaches of machine learning that can be incorporated in applied finance. We consider Amazon Stock Decision Process with Spearman Correlation where A is the set of discrete actions of AMZN 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(Spearman Correlation)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 AMZN 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?

AMZN Stock Forecast (Buy or Sell) for (n+16 weeks)

Sample Set: Neural Network
Stock/Index: AMZN Amazon
Time series to forecast n: 22 Oct 2022 for (n+16 weeks)

According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Hold AMZN 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

Amazon assigned short-term Ba1 & long-term Ba1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (DNN Layer) with Spearman Correlation1,2,3,4 and conclude that the AMZN 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 Hold AMZN stock.

Financial State Forecast for AMZN Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba1Ba1
Operational Risk 6186
Market Risk7582
Technical Analysis9061
Fundamental Analysis8555
Risk Unsystematic4970

Prediction Confidence Score

Trust metric by Neural Network: 85 out of 100 with 701 signals.

References

  1. Mikolov T, Yih W, Zweig G. 2013c. Linguistic regularities in continuous space word representations. In Pro- ceedings of the 2013 Conference of the North American Chapter of the Association for Computational Linguistics: Human Language Technologies, pp. 746–51. New York: Assoc. Comput. Linguist.
  2. Jiang N, Li L. 2016. Doubly robust off-policy value evaluation for reinforcement learning. In Proceedings of the 33rd International Conference on Machine Learning, pp. 652–61. La Jolla, CA: Int. Mach. Learn. Soc.
  3. V. Borkar. A sensitivity formula for the risk-sensitive cost and the actor-critic algorithm. Systems & Control Letters, 44:339–346, 2001
  4. Athey S, Imbens GW. 2017b. The state of applied econometrics: causality and policy evaluation. J. Econ. Perspect. 31:3–32
  5. Jiang N, Li L. 2016. Doubly robust off-policy value evaluation for reinforcement learning. In Proceedings of the 33rd International Conference on Machine Learning, pp. 652–61. La Jolla, CA: Int. Mach. Learn. Soc.
  6. White H. 1992. Artificial Neural Networks: Approximation and Learning Theory. Oxford, UK: Blackwell
  7. Scott SL. 2010. A modern Bayesian look at the multi-armed bandit. Appl. Stoch. Models Bus. Ind. 26:639–58
Frequently Asked QuestionsQ: What is the prediction methodology for AMZN stock?
A: AMZN stock prediction methodology: We evaluate the prediction models Modular Neural Network (DNN Layer) and Spearman Correlation
Q: Is AMZN stock a buy or sell?
A: The dominant strategy among neural network is to Hold AMZN Stock.
Q: Is Amazon stock a good investment?
A: The consensus rating for Amazon is Hold and assigned short-term Ba1 & long-term Ba1 forecasted stock rating.
Q: What is the consensus rating of AMZN stock?
A: The consensus rating for AMZN is Hold.
Q: What is the prediction period for AMZN stock?
A: The prediction period for AMZN is (n+16 weeks)

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