Modelling A.I. in Economics

Should You Buy Now or Wait? DAX Index Stock Forecast (Forecast)

Finance is one of the pioneering industries that started using Machine Learning (ML), a subset of Artificial Intelligence (AI) in the early 80s for market prediction. Since then, major firms and hedge funds have adopted machine learning for stock prediction, portfolio optimization, credit lending, stock betting, etc. In this paper, we survey all the different approaches of machine learning that can be incorporated in applied finance. We evaluate DAX Index prediction models with Modular Neural Network (DNN Layer) and Stepwise Regression1,2,3,4 and conclude that the DAX Index 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 Hold DAX Index stock.


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

Key Points

  1. Is now good time to invest?
  2. Decision Making
  3. What statistical methods are used to analyze data?

DAX Index Target Price Prediction Modeling Methodology

This paper examines the theory and practice of regression techniques for prediction of stock price trend by using a transformed data set in ordinal data format. The original pretransformed data source contains data of heterogeneous data types used for handling of currency values and financial ratios. The data formats in currency values and financial ratios provide a process for computation of stock prices. The transformed data set contains only a standardized ordinal data type which provides a process to measure rankings of stock price trends. We consider DAX Index Stock Decision Process with Stepwise Regression where A is the set of discrete actions of DAX Index 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(Stepwise 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(Modular Neural Network (DNN Layer)) X S(n):→ (n+8 weeks) e x rx

n:Time series to forecast

p:Price signals of DAX Index 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?

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

Sample Set: Neural Network
Stock/Index: DAX Index DAX Index
Time series to forecast n: 05 Oct 2022 for (n+8 weeks)

According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Hold DAX Index 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

DAX Index assigned short-term Ba3 & long-term B3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (DNN Layer) with Stepwise Regression1,2,3,4 and conclude that the DAX Index 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 Hold DAX Index stock.

Financial State Forecast for DAX Index Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba3B3
Operational Risk 4446
Market Risk5842
Technical Analysis8870
Fundamental Analysis7033
Risk Unsystematic6148

Prediction Confidence Score

Trust metric by Neural Network: 88 out of 100 with 568 signals.

References

  1. Mnih A, Teh YW. 2012. A fast and simple algorithm for training neural probabilistic language models. In Proceedings of the 29th International Conference on Machine Learning, pp. 419–26. La Jolla, CA: Int. Mach. Learn. Soc.
  2. Ashley, R. (1988), "On the relative worth of recent macroeconomic forecasts," International Journal of Forecasting, 4, 363–376.
  3. Hastie T, Tibshirani R, Wainwright M. 2015. Statistical Learning with Sparsity: The Lasso and Generalizations. New York: CRC Press
  4. Chipman HA, George EI, McCulloch RE. 2010. Bart: Bayesian additive regression trees. Ann. Appl. Stat. 4:266–98
  5. R. Howard and J. Matheson. Risk sensitive Markov decision processes. Management Science, 18(7):356– 369, 1972
  6. Bastani H, Bayati M. 2015. Online decision-making with high-dimensional covariates. Work. Pap., Univ. Penn./ Stanford Grad. School Bus., Philadelphia/Stanford, CA
  7. Schapire RE, Freund Y. 2012. Boosting: Foundations and Algorithms. Cambridge, MA: MIT Press
Frequently Asked QuestionsQ: What is the prediction methodology for DAX Index stock?
A: DAX Index stock prediction methodology: We evaluate the prediction models Modular Neural Network (DNN Layer) and Stepwise Regression
Q: Is DAX Index stock a buy or sell?
A: The dominant strategy among neural network is to Hold DAX Index Stock.
Q: Is DAX Index stock a good investment?
A: The consensus rating for DAX Index is Hold and assigned short-term Ba3 & long-term B3 forecasted stock rating.
Q: What is the consensus rating of DAX Index stock?
A: The consensus rating for DAX Index is Hold.
Q: What is the prediction period for DAX Index stock?
A: The prediction period for DAX Index is (n+8 weeks)

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