Efficient Market Hypothesis (EMH) is the cornerstone of the modern financial theory and it states that it is impossible to predict the price of any stock using any trend, fundamental or technical analysis. Stock trading is one of the most important activities in the world of finance. Stock price prediction has been an age-old problem and many researchers from academia and business have tried to solve it using many techniques ranging from basic statistics to machine learning using relevant information such as news sentiment and historical prices. We evaluate SAP prediction models with Modular Neural Network (Market Direction Analysis) and Ridge Regression1,2,3,4 and conclude that the SAP.DE stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy SAP.DE stock.
Keywords: SAP.DE, SAP, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.
Key Points
- Market Risk
- Probability Distribution
- Reaction Function
SAP.DE Target Price Prediction Modeling Methodology
The research reported in the paper focuses on the stock market prediction problem, the main aim being the development of a methodology to forecast the stock closing price. The methodology is based on some novel variable selection methods and an analysis of neural network and support vector machines based prediction models. Also, a hybrid approach which combines the use of the variables derived from technical and fundamental analysis of stock market indicators in order to improve prediction results of the proposed approaches is reported in this paper. We consider SAP Stock Decision Process with Ridge Regression where A is the set of discrete actions of SAP.DE 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(Ridge Regression)5,6,7= X R(Modular Neural Network (Market Direction Analysis)) X S(n):→ (n+8 weeks)
n:Time series to forecast
p:Price signals of SAP.DE stock
j:Nash equilibria
k:Dominated move
a:Best response for target price
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SAP.DE Stock Forecast (Buy or Sell) for (n+8 weeks)
Sample Set: Neural NetworkStock/Index: SAP.DE SAP
Time series to forecast n: 13 Oct 2022 for (n+8 weeks)
According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy SAP.DE 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
SAP assigned short-term Ba3 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Market Direction Analysis) with Ridge Regression1,2,3,4 and conclude that the SAP.DE stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy SAP.DE stock.
Financial State Forecast for SAP.DE Stock Options & Futures
| Rating | Short-Term | Long-Term Senior |
|---|---|---|
| Outlook* | Ba3 | Ba3 |
| Operational Risk | 65 | 59 |
| Market Risk | 64 | 37 |
| Technical Analysis | 82 | 89 |
| Fundamental Analysis | 77 | 76 |
| Risk Unsystematic | 46 | 52 |
Prediction Confidence Score
References
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- Breiman L. 2001a. Random forests. Mach. Learn. 45:5–32
- M. Babes, E. M. de Cote, and M. L. Littman. Social reward shaping in the prisoner's dilemma. In 7th International Joint Conference on Autonomous Agents and Multiagent Systems (AAMAS 2008), Estoril, Portugal, May 12-16, 2008, Volume 3, pages 1389–1392, 2008.
- A. Y. Ng, D. Harada, and S. J. Russell. Policy invariance under reward transformations: Theory and application to reward shaping. In Proceedings of the Sixteenth International Conference on Machine Learning (ICML 1999), Bled, Slovenia, June 27 - 30, 1999, pages 278–287, 1999.
- Bengio Y, Schwenk H, Senécal JS, Morin F, Gauvain JL. 2006. Neural probabilistic language models. In Innovations in Machine Learning: Theory and Applications, ed. DE Holmes, pp. 137–86. Berlin: Springer
- Li L, Chu W, Langford J, Moon T, Wang X. 2012. An unbiased offline evaluation of contextual bandit algo- rithms with generalized linear models. In Proceedings of 4th ACM International Conference on Web Search and Data Mining, pp. 297–306. New York: ACM
Frequently Asked Questions
Q: What is the prediction methodology for SAP.DE stock?A: SAP.DE stock prediction methodology: We evaluate the prediction models Modular Neural Network (Market Direction Analysis) and Ridge Regression
Q: Is SAP.DE stock a buy or sell?
A: The dominant strategy among neural network is to Buy SAP.DE Stock.
Q: Is SAP stock a good investment?
A: The consensus rating for SAP is Buy and assigned short-term Ba3 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of SAP.DE stock?
A: The consensus rating for SAP.DE is Buy.
Q: What is the prediction period for SAP.DE stock?
A: The prediction period for SAP.DE is (n+8 weeks)
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