Predictions on stock market prices are a great challenge due to the fact that it is an immensely complex, chaotic and dynamic environment. There are many studies from various areas aiming to take on that challenge and Machine Learning approaches have been the focus of many of them. There are many examples of Machine Learning algorithms been able to reach satisfactory results when doing that type of prediction. This article studies the usage of LSTM networks on that scenario, to predict future trends of stock prices based on the price history, alongside with technical analysis indicators. We evaluate Karachi 100 Index prediction models with Modular Neural Network (Market Direction Analysis) and Logistic Regression1,2,3,4 and conclude that the Karachi 100 Index stock is predictable in the short/long term. According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold Karachi 100 Index stock.

Keywords: Karachi 100 Index, Karachi 100 Index, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

1. Market Signals
3. Is it better to buy and sell or hold?

Karachi 100 Index Target Price Prediction Modeling Methodology

The main objective of this research is to predict the market performance on day closing using different machine learning techniques. The prediction model uses different attributes as an input and predicts market as Positive & Negative. We consider Karachi 100 Index Stock Decision Process with Logistic Regression where A is the set of discrete actions of Karachi 100 Index 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(Logistic Regression)5,6,7= $\begin{array}{cccc}{p}_{a1}& {p}_{a2}& \dots & {p}_{1n}\\ & ⋮\\ {p}_{j1}& {p}_{j2}& \dots & {p}_{jn}\\ & ⋮\\ {p}_{k1}& {p}_{k2}& \dots & {p}_{kn}\\ & ⋮\\ {p}_{n1}& {p}_{n2}& \dots & {p}_{nn}\end{array}$ X R(Modular Neural Network (Market Direction Analysis)) X S(n):→ (n+1 year) $R=\left(\begin{array}{ccc}1& 0& 0\\ 0& 1& 0\\ 0& 0& 1\end{array}\right)$

n:Time series to forecast

p:Price signals of Karachi 100 Index 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?

Karachi 100 Index Stock Forecast (Buy or Sell) for (n+1 year)

Sample Set: Neural Network
Stock/Index: Karachi 100 Index Karachi 100 Index
Time series to forecast n: 13 Oct 2022 for (n+1 year)

According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold Karachi 100 Index 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

Karachi 100 Index assigned short-term B3 & long-term B1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Market Direction Analysis) with Logistic Regression1,2,3,4 and conclude that the Karachi 100 Index stock is predictable in the short/long term. According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold Karachi 100 Index stock.

Financial State Forecast for Karachi 100 Index Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B3B1
Operational Risk 3344
Market Risk6381
Technical Analysis3450
Fundamental Analysis5370
Risk Unsystematic6259

Prediction Confidence Score

Trust metric by Neural Network: 93 out of 100 with 666 signals.

References

1. Mnih A, Kavukcuoglu K. 2013. Learning word embeddings efficiently with noise-contrastive estimation. In Advances in Neural Information Processing Systems, Vol. 26, ed. Z Ghahramani, M Welling, C Cortes, ND Lawrence, KQ Weinberger, pp. 2265–73. San Diego, CA: Neural Inf. Process. Syst. Found.
2. Hirano K, Porter JR. 2009. Asymptotics for statistical treatment rules. Econometrica 77:1683–701
3. Byron, R. P. O. Ashenfelter (1995), "Predicting the quality of an unborn grange," Economic Record, 71, 40–53.
4. Belsley, D. A. (1988), "Modelling and forecast reliability," International Journal of Forecasting, 4, 427–447.
5. K. Tumer and D. Wolpert. A survey of collectives. In K. Tumer and D. Wolpert, editors, Collectives and the Design of Complex Systems, pages 1–42. Springer, 2004.
6. Jacobs B, Donkers B, Fok D. 2014. Product Recommendations Based on Latent Purchase Motivations. Rotterdam, Neth.: ERIM
7. T. Shardlow and A. Stuart. A perturbation theory for ergodic Markov chains and application to numerical approximations. SIAM journal on numerical analysis, 37(4):1120–1137, 2000
Frequently Asked QuestionsQ: What is the prediction methodology for Karachi 100 Index stock?
A: Karachi 100 Index stock prediction methodology: We evaluate the prediction models Modular Neural Network (Market Direction Analysis) and Logistic Regression
Q: Is Karachi 100 Index stock a buy or sell?
A: The dominant strategy among neural network is to Hold Karachi 100 Index Stock.
Q: Is Karachi 100 Index stock a good investment?
A: The consensus rating for Karachi 100 Index is Hold and assigned short-term B3 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of Karachi 100 Index stock?
A: The consensus rating for Karachi 100 Index is Hold.
Q: What is the prediction period for Karachi 100 Index stock?
A: The prediction period for Karachi 100 Index is (n+1 year)