Modelling A.I. in Economics

STLD Options & Futures Prediction (Forecast)

Stock market trading is an activity in which investors need fast and accurate information to make effective decisions. Since many stocks are traded on a stock exchange, numerous factors influence the decision-making process. Moreover, the behaviour of stock prices is uncertain and hard to predict. For these reasons, stock price prediction is an important process and a challenging one. We evaluate Steel Dynamics prediction models with Modular Neural Network (DNN Layer) and Wilcoxon Rank-Sum Test1,2,3,4 and conclude that the STLD stock is predictable in the short/long term. According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Hold STLD stock.


Keywords: STLD, Steel Dynamics, 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. What is neural prediction?
  3. Can we predict stock market using machine learning?

STLD Target Price Prediction Modeling Methodology

The aim of this study is to evaluate the effectiveness of using external indicators, such as commodity prices and currency exchange rates, in predicting movements. The performance of each technique is evaluated using different domain specific metrics. A comprehensive evaluation procedure is described, involving the use of trading simulations to assess the practical value of predictive models, and comparison with simple benchmarks that respond to underlying market growth. We consider Steel Dynamics Stock Decision Process with Wilcoxon Rank-Sum Test where A is the set of discrete actions of STLD 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(Wilcoxon Rank-Sum 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 (DNN Layer)) X S(n):→ (n+3 month) i = 1 n s i

n:Time series to forecast

p:Price signals of STLD 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?

STLD Stock Forecast (Buy or Sell) for (n+3 month)

Sample Set: Neural Network
Stock/Index: STLD Steel Dynamics
Time series to forecast n: 30 Oct 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Hold STLD 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 Steel Dynamics

  1. In cases such as those described in the preceding paragraph, to designate, at initial recognition, the financial assets and financial liabilities not otherwise so measured as at fair value through profit or loss may eliminate or significantly reduce the measurement or recognition inconsistency and produce more relevant information. For practical purposes, the entity need not enter into all of the assets and liabilities giving rise to the measurement or recognition inconsistency at exactly the same time. A reasonable delay is permitted provided that each transaction is designated as at fair value through profit or loss at its initial recognition and, at that time, any remaining transactions are expected to occur.
  2. If, at the date of initial application, it is impracticable (as defined in IAS 8) for an entity to assess whether the fair value of a prepayment feature was insignificant in accordance with paragraph B4.1.12(c) on the basis of the facts and circumstances that existed at the initial recognition of the financial asset, an entity shall assess the contractual cash flow characteristics of that financial asset on the basis of the facts and circumstances that existed at the initial recognition of the financial asset without taking into account the exception for prepayment features in paragraph B4.1.12. (See also paragraph 42S of IFRS 7.)
  3. Paragraph 4.1.1(b) requires an entity to classify a financial asset on the basis of its contractual cash flow characteristics if the financial asset is held within a business model whose objective is to hold assets to collect contractual cash flows or within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, unless paragraph 4.1.5 applies. To do so, the condition in paragraphs 4.1.2(b) and 4.1.2A(b) requires an entity to determine whether the asset's contractual cash flows are solely payments of principal and interest on the principal amount outstanding.
  4. If an entity prepares interim financial reports in accordance with IAS 34 Interim Financial Reporting the entity need not apply the requirements in this Standard to interim periods prior to the date of initial application if it is impracticable (as defined in IAS 8).

*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

Steel Dynamics assigned short-term B1 & long-term B2 forecasted stock rating. We evaluate the prediction models Modular Neural Network (DNN Layer) with Wilcoxon Rank-Sum Test1,2,3,4 and conclude that the STLD stock is predictable in the short/long term. According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Hold STLD stock.

Financial State Forecast for STLD Steel Dynamics Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B1B2
Operational Risk 8040
Market Risk5653
Technical Analysis6844
Fundamental Analysis4858
Risk Unsystematic3950

Prediction Confidence Score

Trust metric by Neural Network: 75 out of 100 with 626 signals.

References

  1. Clements, M. P. D. F. Hendry (1997), "An empirical study of seasonal unit roots in forecasting," International Journal of Forecasting, 13, 341–355.
  2. Hoerl AE, Kennard RW. 1970. Ridge regression: biased estimation for nonorthogonal problems. Technometrics 12:55–67
  3. Bottou L. 2012. Stochastic gradient descent tricks. In Neural Networks: Tricks of the Trade, ed. G Montavon, G Orr, K-R Müller, pp. 421–36. Berlin: Springer
  4. D. S. Bernstein, S. Zilberstein, and N. Immerman. The complexity of decentralized control of Markov Decision Processes. In UAI '00: Proceedings of the 16th Conference in Uncertainty in Artificial Intelligence, Stanford University, Stanford, California, USA, June 30 - July 3, 2000, pages 32–37, 2000.
  5. Efron B, Hastie T. 2016. Computer Age Statistical Inference, Vol. 5. Cambridge, UK: Cambridge Univ. Press
  6. Chernozhukov V, Newey W, Robins J. 2018c. Double/de-biased machine learning using regularized Riesz representers. arXiv:1802.08667 [stat.ML]
  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 STLD stock?
A: STLD stock prediction methodology: We evaluate the prediction models Modular Neural Network (DNN Layer) and Wilcoxon Rank-Sum Test
Q: Is STLD stock a buy or sell?
A: The dominant strategy among neural network is to Hold STLD Stock.
Q: Is Steel Dynamics stock a good investment?
A: The consensus rating for Steel Dynamics is Hold and assigned short-term B1 & long-term B2 forecasted stock rating.
Q: What is the consensus rating of STLD stock?
A: The consensus rating for STLD is Hold.
Q: What is the prediction period for STLD stock?
A: The prediction period for STLD is (n+3 month)

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