Modelling A.I. in Economics

AME AMETEK Inc.

AMETEK Inc. Research Report

Summary

Accurate stock market prediction is of great interest to investors; however, stock markets are driven by volatile factors such as microblogs and news that make it hard to predict stock market index based on merely the historical data. The enormous stock market volatility emphasizes the need to effectively assess the role of external factors in stock prediction. Stock markets can be predicted using machine learning algorithms on information contained in social media and financial news, as this data can change investors' behavior. We evaluate AMETEK Inc. prediction models with Transfer Learning (ML) and Multiple Regression1,2,3,4 and conclude that the AME 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 AME stock.

Key Points

  1. What is Markov decision process in reinforcement learning?
  2. How do you know when a stock will go up or down?
  3. How can neural networks improve predictions?

AME Target Price Prediction Modeling Methodology

We consider AMETEK Inc. Decision Process with Transfer Learning (ML) where A is the set of discrete actions of AME 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(Multiple 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(Transfer Learning (ML)) X S(n):→ (n+6 month) R = r 1 r 2 r 3

n:Time series to forecast

p:Price signals of AME stock

j:Nash equilibria (Neural Network)

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?

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

Sample Set: Neural Network
Stock/Index: AME AMETEK Inc.
Time series to forecast n: 01 Dec 2022 for (n+6 month)

According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Sell AME 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 AMETEK Inc.

  1. If, at the date of initial application, determining whether there has been a significant increase in credit risk since initial recognition would require undue cost or effort, an entity shall recognise a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised (unless that financial instrument is low credit risk at a reporting date, in which case paragraph 7.2.19(a) applies).
  2. Because the hedge accounting model is based on a general notion of offset between gains and losses on the hedging instrument and the hedged item, hedge effectiveness is determined not only by the economic relationship between those items (ie the changes in their underlyings) but also by the effect of credit risk on the value of both the hedging instrument and the hedged item. The effect of credit risk means that even if there is an economic relationship between the hedging instrument and the hedged item, the level of offset might become erratic. This can result from a change in the credit risk of either the hedging instrument or the hedged item that is of such a magnitude that the credit risk dominates the value changes that result from the economic relationship (ie the effect of the changes in the underlyings). A level of magnitude that gives rise to dominance is one that would result in the loss (or gain) from credit risk frustrating the effect of changes in the underlyings on the value of the hedging instrument or the hedged item, even if those changes were significant.
  3. A hedge of a firm commitment (for example, a hedge of the change in fuel price relating to an unrecognised contractual commitment by an electric utility to purchase fuel at a fixed price) is a hedge of an exposure to a change in fair value. Accordingly, such a hedge is a fair value hedge. However, in accordance with paragraph 6.5.4, a hedge of the foreign currency risk of a firm commitment could alternatively be accounted for as a cash flow hedge.
  4. Expected credit losses reflect an entity's own expectations of credit losses. However, when considering all reasonable and supportable information that is available without undue cost or effort in estimating expected credit losses, an entity should also consider observable market information about the credit risk of the particular financial instrument or similar financial instruments.

*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

AMETEK Inc. assigned short-term B3 & long-term B1 forecasted stock rating. We evaluate the prediction models Transfer Learning (ML) with Multiple Regression1,2,3,4 and conclude that the AME 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 AME stock.

Financial State Forecast for AME AMETEK Inc. Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B3B1
Operational Risk 7090
Market Risk4333
Technical Analysis3352
Fundamental Analysis3538
Risk Unsystematic7684

Prediction Confidence Score

Trust metric by Neural Network: 87 out of 100 with 455 signals.

References

  1. M. Petrik and D. Subramanian. An approximate solution method for large risk-averse Markov decision processes. In Proceedings of the 28th International Conference on Uncertainty in Artificial Intelligence, 2012.
  2. Athey S, Bayati M, Imbens G, Zhaonan Q. 2019. Ensemble methods for causal effects in panel data settings. NBER Work. Pap. 25675
  3. S. Bhatnagar and K. Lakshmanan. An online actor-critic algorithm with function approximation for con- strained Markov decision processes. Journal of Optimization Theory and Applications, 153(3):688–708, 2012.
  4. M. Benaim, J. Hofbauer, and S. Sorin. Stochastic approximations and differential inclusions, Part II: Appli- cations. Mathematics of Operations Research, 31(4):673–695, 2006
  5. Abadie A, Imbens GW. 2011. Bias-corrected matching estimators for average treatment effects. J. Bus. Econ. Stat. 29:1–11
  6. R. Howard and J. Matheson. Risk sensitive Markov decision processes. Management Science, 18(7):356– 369, 1972
  7. Miller A. 2002. Subset Selection in Regression. New York: CRC Press
Frequently Asked QuestionsQ: What is the prediction methodology for AME stock?
A: AME stock prediction methodology: We evaluate the prediction models Transfer Learning (ML) and Multiple Regression
Q: Is AME stock a buy or sell?
A: The dominant strategy among neural network is to Sell AME Stock.
Q: Is AMETEK Inc. stock a good investment?
A: The consensus rating for AMETEK Inc. is Sell and assigned short-term B3 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of AME stock?
A: The consensus rating for AME is Sell.
Q: What is the prediction period for AME stock?
A: The prediction period for AME is (n+6 month)

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