Short/Long Term Stocks: AFG Stock Forecast (Forecast)

Stock market prediction is a major exertion in the field of finance and establishing businesses. Stock market is totally uncertain as the prices of stocks keep fluctuating on a daily basis because of numerous factors that influence it. One of the traditional ways of predicting stock prices was by using only historical data. But with time it was observed that other factors such as peoples' sentiments and other news events occurring in and around the country affect the stock market, for e.g. national elections, natural calamity etc. We evaluate American Financial Group prediction models with Deductive Inference (ML) and Statistical Hypothesis Testing^1,2,3,4 and conclude that the AFG 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 AFG stock.

Keywords: AFG, American Financial Group, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

1. Can neural networks predict stock market?
2. Understanding Buy, Sell, and Hold Ratings
3. Buy, Sell and Hold Signals

AFG Target Price Prediction Modeling Methodology

This paper tries to address the problem of stock market prediction leveraging artificial intelligence (AI) strategies. The stock market prediction can be modeled based on two principal analyses called technical and fundamental. In the technical analysis approach, the regression machine learning (ML) algorithms are employed to predict the stock price trend at the end of a business day based on the historical price data. In contrast, in the fundamental analysis, the classification ML algorithms are applied to classify the public sentiment based on news and social media. We consider American Financial Group Stock Decision Process with Statistical Hypothesis Testing where A is the set of discrete actions of AFG 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(Statistical Hypothesis Testing)^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(Deductive Inference (ML)) X S(n):→ (n+16 weeks) $\overrightarrow{S}=\left(s_1,s_2,s_3\right)$

n:Time series to forecast

p:Price signals of AFG 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?

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

Sample Set: Neural Network
Stock/Index: AFG American Financial Group
Time series to forecast n: 30 Oct 2022 for (n+16 weeks)

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

1. If the contractual cash flows on a financial asset have been renegotiated or otherwise modified, but the financial asset is not derecognised, that financial asset is not automatically considered to have lower credit risk. An entity shall assess whether there has been a significant increase in credit risk since initial recognition on the basis of all reasonable and supportable information that is available without undue cost or effort. This includes historical and forwardlooking information and an assessment of the credit risk over the expected life of the financial asset, which includes information about the circumstances that led to the modification. Evidence that the criteria for the recognition of lifetime expected credit losses are no longer met may include a history of up-to-date and timely payment performance against the modified contractual terms. Typically a customer would need to demonstrate consistently good payment behaviour over a period of time before the credit risk is considered to have decreased.
2. If a financial instrument is designated in accordance with paragraph 6.7.1 as measured at fair value through profit or loss after its initial recognition, or was previously not recognised, the difference at the time of designation between the carrying amount, if any, and the fair value shall immediately be recognised in profit or loss. For financial assets measured at fair value through other comprehensive income in accordance with paragraph 4.1.2A, the cumulative gain or loss previously recognised in other comprehensive income shall immediately be reclassified from equity to profit or loss as a reclassification adjustment.
3. For some types of fair value hedges, the objective of the hedge is not primarily to offset the fair value change of the hedged item but instead to transform the cash flows of the hedged item. For example, an entity hedges the fair value interest rate risk of a fixed-rate debt instrument using an interest rate swap. The entity's hedge objective is to transform the fixed-interest cash flows into floating interest cash flows. This objective is reflected in the accounting for the hedging relationship by accruing the net interest accrual on the interest rate swap in profit or loss. In the case of a hedge of a net position (for example, a net position of a fixed-rate asset and a fixed-rate liability), this net interest accrual must be presented in a separate line item in the statement of profit or loss and other comprehensive income. This is to avoid the grossing up of a single instrument's net gains or losses into offsetting gross amounts and recognising them in different line items (for example, this avoids grossing up a net interest receipt on a single interest rate swap into gross interest revenue and gross interest expense).
4. An entity is not required to restate prior periods to reflect the application of these amendments. The entity may restate prior periods if, and only if, it is possible without the use of hindsight. If an entity does not restate prior periods, the entity shall recognise any difference between the previous carrying amount and the carrying amount at the beginning of the annual reporting period that includes the date of initial application of these amendments in the opening retained earnings (or other component of equity, as appropriate) of the annual reporting period that includes the date of initial application of these amendments.

*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

American Financial Group assigned short-term B3 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Deductive Inference (ML) with Statistical Hypothesis Testing^1,2,3,4 and conclude that the AFG 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 AFG stock.

Financial State Forecast for AFG American Financial Group Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	B3	Ba3
Operational Risk	37	85
Market Risk	60	65
Technical Analysis	42	53
Fundamental Analysis	56	71
Risk Unsystematic	62	39

Prediction Confidence Score

Trust metric by Neural Network: 84 out of 100 with 485 signals.

References

1. Krizhevsky A, Sutskever I, Hinton GE. 2012. Imagenet classification with deep convolutional neural networks. In Advances in Neural Information Processing Systems, Vol. 25, ed. Z Ghahramani, M Welling, C Cortes, ND Lawrence, KQ Weinberger, pp. 1097–105. San Diego, CA: Neural Inf. Process. Syst. Found.
2. H. Khalil and J. Grizzle. Nonlinear systems, volume 3. Prentice hall Upper Saddle River, 2002.
3. Clements, M. P. D. F. Hendry (1996), "Intercept corrections and structural change," Journal of Applied Econometrics, 11, 475–494.
4. Belsley, D. A. (1988), "Modelling and forecast reliability," International Journal of Forecasting, 4, 427–447.
5. D. Bertsekas. Min common/max crossing duality: A geometric view of conjugacy in convex optimization. Lab. for Information and Decision Systems, MIT, Tech. Rep. Report LIDS-P-2796, 2009
6. E. Altman, K. Avrachenkov, and R. N ́u ̃nez-Queija. Perturbation analysis for denumerable Markov chains with application to queueing models. Advances in Applied Probability, pages 839–853, 2004
7. F. A. Oliehoek, M. T. J. Spaan, and N. A. Vlassis. Optimal and approximate q-value functions for decentralized pomdps. J. Artif. Intell. Res. (JAIR), 32:289–353, 2008

Frequently Asked Questions

Q: What is the prediction methodology for AFG stock?
A: AFG stock prediction methodology: We evaluate the prediction models Deductive Inference (ML) and Statistical Hypothesis Testing
Q: Is AFG stock a buy or sell?
A: The dominant strategy among neural network is to Hold AFG Stock.
Q: Is American Financial Group stock a good investment?
A: The consensus rating for American Financial Group is Hold and assigned short-term B3 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of AFG stock?
A: The consensus rating for AFG is Hold.
Q: What is the prediction period for AFG stock?
A: The prediction period for AFG is (n+16 weeks)

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