Modelling A.I. in Economics

Is now good time to invest? (UPS Stock Forecast)

Prediction of future movement of stock prices has always been a challenging task for the researchers. While the advocates of the efficient market hypothesis (EMH) believe that it is impossible to design any predictive framework that can accurately predict the movement of stock prices, there are seminal work in the literature that have clearly demonstrated that the seemingly random movement patterns in the time series of a stock price can be predicted with a high level of accuracy. We evaluate United Parcel Service prediction models with Modular Neural Network (Financial Sentiment Analysis) and Polynomial Regression1,2,3,4 and conclude that the UPS 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 UPS stock.


Keywords: UPS, United Parcel Service, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. Reaction Function
  2. Operational Risk
  3. How do you know when a stock will go up or down?

UPS Target Price Prediction Modeling Methodology

Stock market is basically nonlinear in nature and the research on stock market is one of the most important issues in recent years. People invest in stock market based on some prediction. For predict, the stock market prices people search such methods and tools which will increase their profits, while minimize their risks. Prediction plays a very important role in stock market business which is very complicated and challenging process. We consider United Parcel Service Stock Decision Process with Polynomial Regression where A is the set of discrete actions of UPS 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(Polynomial Regression)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 (Financial Sentiment Analysis)) X S(n):→ (n+6 month) r s rs

n:Time series to forecast

p:Price signals of UPS 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?

UPS Stock Forecast (Buy or Sell) for (n+6 month)

Sample Set: Neural Network
Stock/Index: UPS United Parcel Service
Time series to forecast n: 30 Oct 2022 for (n+6 month)

According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold UPS 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 United Parcel Service

  1. However, depending on the nature of the financial instruments and the credit risk information available for particular groups of financial instruments, an entity may not be able to identify significant changes in credit risk for individual financial instruments before the financial instrument becomes past due. This may be the case for financial instruments such as retail loans for which there is little or no updated credit risk information that is routinely obtained and monitored on an individual instrument until a customer breaches the contractual terms. If changes in the credit risk for individual financial instruments are not captured before they become past due, a loss allowance based only on credit information at an individual financial instrument level would not faithfully represent the changes in credit risk since initial recognition.
  2. 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.
  3. However, the designation of the hedging relationship using the same hedge ratio as that resulting from the quantities of the hedged item and the hedging instrument that the entity actually uses shall not reflect an imbalance between the weightings of the hedged item and the hedging instrument that would in turn create hedge ineffectiveness (irrespective of whether recognised or not) that could result in an accounting outcome that would be inconsistent with the purpose of hedge accounting. Hence, for the purpose of designating a hedging relationship, an entity must adjust the hedge ratio that results from the quantities of the hedged item and the hedging instrument that the entity actually uses if that is needed to avoid such an imbalance
  4. In some cases, the qualitative and non-statistical quantitative information available may be sufficient to determine that a financial instrument has met the criterion for the recognition of a loss allowance at an amount equal to lifetime expected credit losses. That is, the information does not need to flow through a statistical model or credit ratings process in order to determine whether there has been a significant increase in the credit risk of the financial instrument. In other cases, an entity may need to consider other information, including information from its statistical models or credit ratings processes.

*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

United Parcel Service assigned short-term Baa2 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Financial Sentiment Analysis) with Polynomial Regression1,2,3,4 and conclude that the UPS 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 UPS stock.

Financial State Forecast for UPS United Parcel Service Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Baa2Ba3
Operational Risk 7758
Market Risk7459
Technical Analysis8477
Fundamental Analysis6156
Risk Unsystematic8074

Prediction Confidence Score

Trust metric by Neural Network: 72 out of 100 with 463 signals.

References

  1. Bertsimas D, King A, Mazumder R. 2016. Best subset selection via a modern optimization lens. Ann. Stat. 44:813–52
  2. Allen, P. G. (1994), "Economic forecasting in agriculture," International Journal of Forecasting, 10, 81–135.
  3. Efron B, Hastie T. 2016. Computer Age Statistical Inference, Vol. 5. Cambridge, UK: Cambridge Univ. Press
  4. Varian HR. 2014. Big data: new tricks for econometrics. J. Econ. Perspect. 28:3–28
  5. Canova, F. B. E. Hansen (1995), "Are seasonal patterns constant over time? A test for seasonal stability," Journal of Business and Economic Statistics, 13, 237–252.
  6. Ashley, R. (1988), "On the relative worth of recent macroeconomic forecasts," International Journal of Forecasting, 4, 363–376.
  7. Hirano K, Porter JR. 2009. Asymptotics for statistical treatment rules. Econometrica 77:1683–701
Frequently Asked QuestionsQ: What is the prediction methodology for UPS stock?
A: UPS stock prediction methodology: We evaluate the prediction models Modular Neural Network (Financial Sentiment Analysis) and Polynomial Regression
Q: Is UPS stock a buy or sell?
A: The dominant strategy among neural network is to Hold UPS Stock.
Q: Is United Parcel Service stock a good investment?
A: The consensus rating for United Parcel Service is Hold and assigned short-term Baa2 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of UPS stock?
A: The consensus rating for UPS is Hold.
Q: What is the prediction period for UPS stock?
A: The prediction period for UPS is (n+6 month)



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