Machine Learning stock prediction: XP Stock Prediction

Recently, numerous investigations for stock price prediction and portfolio management using machine learning have been trying to develop efficient mechanical trading systems. But these systems have a limitation in that they are mainly based on the supervised learning which is not so adequate for learning problems with long-term goals and delayed rewards. This paper proposes a method of applying reinforcement learning, suitable for modeling and learning various kinds of interactions in real situations, to the problem of stock price prediction. We evaluate XP INC. CLASS A CMN prediction models with Modular Neural Network (Market News Sentiment Analysis) and ElasticNet Regression^1,2,3,4 and conclude that the XP stock is predictable in the short/long term. According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Sell XP stock.

Keywords: XP, XP INC. CLASS A CMN, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

1. What is the use of Markov decision process?
2. What is a prediction confidence?
3. Game Theory

XP Target Price Prediction Modeling Methodology

Predicting the future price of financial assets has always been an important research topic in the field of quantitative finance. This paper attempts to use the latest artificial intelligence technologies to design and implement a framework for financial asset price prediction. We consider XP INC. CLASS A CMN Stock Decision Process with ElasticNet Regression where A is the set of discrete actions of XP 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(ElasticNet Regression)^5,6,7= $\begin{array}{cccc}{p}_{\mathrm{a}1}& p_{\mathrm{a}2}& \dots & p_{1n}\\ & ⋮\\ p_{j1}& p_{j2}& \dots & p_{jn}\\ & ⋮\\ p_{k1}& p_{k2}& \dots & p_{kn}\\ & ⋮\\ p_{n1}& p_{n2}& \dots & p_{nn}\end{array}$ X R(Modular Neural Network (Market News Sentiment Analysis)) X S(n):→ (n+3 month) $R=\left(\begin{array}{ccc}1& 0& 0\\ 0& 1& 0\\ 0& 0& 1\end{array}\right)$

n:Time series to forecast

p:Price signals of XP 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?

XP Stock Forecast (Buy or Sell) for (n+3 month)

Sample Set: Neural Network
Stock/Index: XP XP INC. CLASS A CMN
Time series to forecast n: 12 Oct 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Sell XP 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

XP INC. CLASS A CMN assigned short-term B1 & long-term B1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Market News Sentiment Analysis) with ElasticNet Regression^1,2,3,4 and conclude that the XP stock is predictable in the short/long term. According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Sell XP stock.

Financial State Forecast for XP Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	B1	B1
Operational Risk	67	46
Market Risk	51	67
Technical Analysis	53	85
Fundamental Analysis	87	53
Risk Unsystematic	46	51

Prediction Confidence Score

Trust metric by Neural Network: 92 out of 100 with 482 signals.

References

1. Dietterich TG. 2000. Ensemble methods in machine learning. In Multiple Classifier Systems: First International Workshop, Cagliari, Italy, June 21–23, pp. 1–15. Berlin: Springer
2. Imbens GW, Rubin DB. 2015. Causal Inference in Statistics, Social, and Biomedical Sciences. Cambridge, UK: Cambridge Univ. Press
3. M. Colby, T. Duchow-Pressley, J. J. Chung, and K. Tumer. Local approximation of difference evaluation functions. In Proceedings of the Fifteenth International Joint Conference on Autonomous Agents and Multiagent Systems, Singapore, May 2016
4. Cheung, Y. M.D. Chinn (1997), "Further investigation of the uncertain unit root in GNP," Journal of Business and Economic Statistics, 15, 68–73.
5. Batchelor, R. P. Dua (1993), "Survey vs ARCH measures of inflation uncertainty," Oxford Bulletin of Economics Statistics, 55, 341–353.
6. K. Boda, J. Filar, Y. Lin, and L. Spanjers. Stochastic target hitting time and the problem of early retirement. Automatic Control, IEEE Transactions on, 49(3):409–419, 2004
7. Hastie T, Tibshirani R, Tibshirani RJ. 2017. Extended comparisons of best subset selection, forward stepwise selection, and the lasso. arXiv:1707.08692 [stat.ME]

Frequently Asked Questions

Q: What is the prediction methodology for XP stock?
A: XP stock prediction methodology: We evaluate the prediction models Modular Neural Network (Market News Sentiment Analysis) and ElasticNet Regression
Q: Is XP stock a buy or sell?
A: The dominant strategy among neural network is to Sell XP Stock.
Q: Is XP INC. CLASS A CMN stock a good investment?
A: The consensus rating for XP INC. CLASS A CMN is Sell and assigned short-term B1 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of XP stock?
A: The consensus rating for XP is Sell.
Q: What is the prediction period for XP stock?
A: The prediction period for XP is (n+3 month)

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