Modelling A.I. in Economics

Should I Buy Stocks Now or Wait Amid Such Uncertainty? (NOW Stock Prediction) (Forecast)

Investors raise profit from stock market by maximising gains and minimising loses. The profit is difficult to raise because of the volatile nature of stock market prices. Predictive modelling allows investors to make informed decisions. We evaluate ServiceNow prediction models with Modular Neural Network (CNN Layer) and Independent T-Test1,2,3,4 and conclude that the NOW stock is predictable in the short/long term. According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Sell NOW stock.


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

Key Points

  1. What is Markov decision process in reinforcement learning?
  2. What statistical methods are used to analyze data?
  3. Is Target price a good indicator?

NOW Target Price Prediction Modeling Methodology

Stock market prediction is the act of trying to determine the future value of a company stock or other financial instrument traded on a financial exchange. The successful prediction of a stock's future price will maximize investor's gains. This paper proposes a machine learning model to predict stock market price. We consider ServiceNow Stock Decision Process with Independent T-Test where A is the set of discrete actions of NOW 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(Independent T-Test)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(Modular Neural Network (CNN Layer)) X S(n):→ (n+6 month) i = 1 n a i

n:Time series to forecast

p:Price signals of NOW 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?

NOW Stock Forecast (Buy or Sell) for (n+6 month)

Sample Set: Neural Network
Stock/Index: NOW ServiceNow
Time series to forecast n: 28 Oct 2022 for (n+6 month)

According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Sell NOW 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 ServiceNow

  1. If the group of items does not have any offsetting risk positions (for example, a group of foreign currency expenses that affect different line items in the statement of profit or loss and other comprehensive income that are hedged for foreign currency risk) then the reclassified hedging instrument gains or losses shall be apportioned to the line items affected by the hedged items. This apportionment shall be done on a systematic and rational basis and shall not result in the grossing up of the net gains or losses arising from a single hedging instrument.
  2. Measurement of a financial asset or financial liability and classification of recognised changes in its value are determined by the item's classification and whether the item is part of a designated hedging relationship. Those requirements can create a measurement or recognition inconsistency (sometimes referred to as an 'accounting mismatch') when, for example, in the absence of designation as at fair value through profit or loss, a financial asset would be classified as subsequently measured at fair value through profit or loss and a liability the entity considers related would be subsequently measured at amortised cost (with changes in fair value not recognised). In such circumstances, an entity may conclude that its financial statements would provide more relevant information if both the asset and the liability were measured as at fair value through profit or loss.
  3. A contractual cash flow characteristic does not affect the classification of the financial asset if it could have only a de minimis effect on the contractual cash flows of the financial asset. To make this determination, an entity must consider the possible effect of the contractual cash flow characteristic in each reporting period and cumulatively over the life of the financial instrument. In addition, if a contractual cash flow characteristic could have an effect on the contractual cash flows that is more than de minimis (either in a single reporting period or cumulatively) but that cash flow characteristic is not genuine, it does not affect the classification of a financial asset. A cash flow characteristic is not genuine if it affects the instrument's contractual cash flows only on the occurrence of an event that is extremely rare, highly abnormal and very unlikely to occur.
  4. For loan commitments, an entity considers changes in the risk of a default occurring on the loan to which a loan commitment relates. For financial guarantee contracts, an entity considers the changes in the risk that the specified debtor will default on the contract.

*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

ServiceNow assigned short-term B1 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (CNN Layer) with Independent T-Test1,2,3,4 and conclude that the NOW stock is predictable in the short/long term. According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Sell NOW stock.

Financial State Forecast for NOW ServiceNow Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B1Ba3
Operational Risk 6159
Market Risk8890
Technical Analysis4937
Fundamental Analysis6165
Risk Unsystematic4863

Prediction Confidence Score

Trust metric by Neural Network: 81 out of 100 with 478 signals.

References

  1. D. Bertsekas. Nonlinear programming. Athena Scientific, 1999.
  2. Bertsimas D, King A, Mazumder R. 2016. Best subset selection via a modern optimization lens. Ann. Stat. 44:813–52
  3. L. Busoniu, R. Babuska, and B. D. Schutter. A comprehensive survey of multiagent reinforcement learning. IEEE Transactions of Systems, Man, and Cybernetics Part C: Applications and Reviews, 38(2), 2008.
  4. S. Bhatnagar. An actor-critic algorithm with function approximation for discounted cost constrained Markov decision processes. Systems & Control Letters, 59(12):760–766, 2010
  5. Athey S, Imbens GW. 2017a. The econometrics of randomized experiments. In Handbook of Economic Field Experiments, Vol. 1, ed. E Duflo, A Banerjee, pp. 73–140. Amsterdam: Elsevier
  6. Alpaydin E. 2009. Introduction to Machine Learning. Cambridge, MA: MIT Press
  7. uyer, S. Whiteson, B. Bakker, and N. A. Vlassis. Multiagent reinforcement learning for urban traffic control using coordination graphs. In Machine Learning and Knowledge Discovery in Databases, European Conference, ECML/PKDD 2008, Antwerp, Belgium, September 15-19, 2008, Proceedings, Part I, pages 656–671, 2008.
Frequently Asked QuestionsQ: What is the prediction methodology for NOW stock?
A: NOW stock prediction methodology: We evaluate the prediction models Modular Neural Network (CNN Layer) and Independent T-Test
Q: Is NOW stock a buy or sell?
A: The dominant strategy among neural network is to Sell NOW Stock.
Q: Is ServiceNow stock a good investment?
A: The consensus rating for ServiceNow is Sell and assigned short-term B1 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of NOW stock?
A: The consensus rating for NOW is Sell.
Q: What is the prediction period for NOW stock?
A: The prediction period for NOW is (n+6 month)

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