Modelling A.I. in Economics

Short/Long Term Stocks: COKE 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 Coca-Cola Consolidated prediction models with Transductive Learning (ML) and Logistic Regression1,2,3,4 and conclude that the COKE 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 COKE stock.


Keywords: COKE, Coca-Cola Consolidated, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. Trading Interaction
  2. Why do we need predictive models?
  3. Trading Signals

COKE Target Price Prediction Modeling Methodology

Impact of many factors on the stock prices makes the stock prediction a difficult and highly complicated task. In this paper, machine learning techniques have been applied for the stock price prediction in order to overcome such difficulties. In the implemented work, five models have been developed and their performances are compared in predicting the stock market trends. We consider Coca-Cola Consolidated Stock Decision Process with Logistic Regression where A is the set of discrete actions of COKE 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= 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(Transductive Learning (ML)) X S(n):→ (n+8 weeks) R = 1 0 0 0 1 0 0 0 1

n:Time series to forecast

p:Price signals of COKE 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?

COKE Stock Forecast (Buy or Sell) for (n+8 weeks)

Sample Set: Neural Network
Stock/Index: COKE Coca-Cola Consolidated
Time series to forecast n: 30 Oct 2022 for (n+8 weeks)

According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy COKE 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 Coca-Cola Consolidated

  1. The credit risk on a financial instrument is considered low for the purposes of paragraph 5.5.10, if the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. Financial instruments are not considered to have low credit risk when they are regarded as having a low risk of loss simply because of the value of collateral and the financial instrument without that collateral would not be considered low credit risk. Financial instruments are also not considered to have low credit risk simply because they have a lower risk of default than the entity's other financial instruments or relative to the credit risk of the jurisdiction within which an entity operates.
  2. It would not be acceptable to designate only some of the financial assets and financial liabilities giving rise to the inconsistency as at fair value through profit or loss if to do so would not eliminate or significantly reduce the inconsistency and would therefore not result in more relevant information. However, it would be acceptable to designate only some of a number of similar financial assets or similar financial liabilities if doing so achieves a significant reduction (and possibly a greater reduction than other allowable designations) in the inconsistency. For example, assume an entity has a number of similar financial liabilities that sum to CU100 and a number of similar financial assets that sum to CU50 but are measured on a different basis. The entity may significantly reduce the measurement inconsistency by designating at initial recognition all of the assets but only some of the liabilities (for example, individual liabilities with a combined total of CU45) as at fair value through profit or loss. However, because designation as at fair value through profit or loss can be applied only to the whole of a financial instrument, the entity in this example must designate one or more liabilities in their entirety. It could not designate either a component of a liability (eg changes in value attributable to only one risk, such as changes in a benchmark interest rate) or a proportion (ie percentage) of a liability.
  3. In accordance with paragraph 4.1.3(a), principal is the fair value of the financial asset at initial recognition. However that principal amount may change over the life of the financial asset (for example, if there are repayments of principal).
  4. The accounting for the time value of options in accordance with paragraph 6.5.15 applies only to the extent that the time value relates to the hedged item (aligned time value). The time value of an option relates to the hedged item if the critical terms of the option (such as the nominal amount, life and underlying) are aligned with the hedged item. Hence, if the critical terms of the option and the hedged item are not fully aligned, an entity shall determine the aligned time value, ie how much of the time value included in the premium (actual time value) relates to the hedged item (and therefore should be treated in accordance with paragraph 6.5.15). An entity determines the aligned time value using the valuation of the option that would have critical terms that perfectly match the hedged item.

*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

Coca-Cola Consolidated assigned short-term Ba1 & long-term B2 forecasted stock rating. We evaluate the prediction models Transductive Learning (ML) with Logistic Regression1,2,3,4 and conclude that the COKE 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 COKE stock.

Financial State Forecast for COKE Coca-Cola Consolidated Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba1B2
Operational Risk 5834
Market Risk8182
Technical Analysis8946
Fundamental Analysis4070
Risk Unsystematic8640

Prediction Confidence Score

Trust metric by Neural Network: 74 out of 100 with 452 signals.

References

  1. M. L. Littman. Markov games as a framework for multi-agent reinforcement learning. In Ma- chine Learning, Proceedings of the Eleventh International Conference, Rutgers University, New Brunswick, NJ, USA, July 10-13, 1994, pages 157–163, 1994
  2. Barrett, C. B. (1997), "Heteroscedastic price forecasting for food security management in developing countries," Oxford Development Studies, 25, 225–236.
  3. R. Rockafellar and S. Uryasev. Optimization of conditional value-at-risk. Journal of Risk, 2:21–42, 2000.
  4. Semenova V, Goldman M, Chernozhukov V, Taddy M. 2018. Orthogonal ML for demand estimation: high dimensional causal inference in dynamic panels. arXiv:1712.09988 [stat.ML]
  5. Angrist JD, Pischke JS. 2008. Mostly Harmless Econometrics: An Empiricist's Companion. Princeton, NJ: Princeton Univ. Press
  6. Meinshausen N. 2007. Relaxed lasso. Comput. Stat. Data Anal. 52:374–93
  7. Batchelor, R. P. Dua (1993), "Survey vs ARCH measures of inflation uncertainty," Oxford Bulletin of Economics Statistics, 55, 341–353.
Frequently Asked QuestionsQ: What is the prediction methodology for COKE stock?
A: COKE stock prediction methodology: We evaluate the prediction models Transductive Learning (ML) and Logistic Regression
Q: Is COKE stock a buy or sell?
A: The dominant strategy among neural network is to Buy COKE Stock.
Q: Is Coca-Cola Consolidated stock a good investment?
A: The consensus rating for Coca-Cola Consolidated is Buy and assigned short-term Ba1 & long-term B2 forecasted stock rating.
Q: What is the consensus rating of COKE stock?
A: The consensus rating for COKE is Buy.
Q: What is the prediction period for COKE stock?
A: The prediction period for COKE is (n+8 weeks)

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