Can neural networks predict stock market? (FLT Stock Forecast)

Stock market is a promising financial investment that can generate great wealth. However, the volatile nature of the stock market makes it a very high risk investment. Thus, a lot of researchers have contributed their efforts to forecast the stock market pricing and average movement. Researchers have used various methods in computer science and economics in their quests to gain a piece of this volatile information and make great fortune out of the stock market investment. This paper investigates various techniques for the stock market prediction using artificial neural network (ANN). We evaluate Fleetcor prediction models with Supervised Machine Learning (ML) and Statistical Hypothesis Testing1,2,3,4 and conclude that the FLT stock is predictable in the short/long term. According to price forecasts for (n+4 weeks) period: The dominant strategy among neural network is to Hold FLT stock.


Keywords: FLT, Fleetcor, 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. Nash Equilibria
  3. Market Risk

FLT Target Price Prediction Modeling Methodology

This paper aims to develop an innovative neural network approach to achieve better stock market predictions. Data were obtained from the live stock market for real-time and off-line analysis and results of visualizations and analytics to demonstrate Internet of Multimedia of Things for stock analysis. To study the influence of market characteristics on stock prices, traditional neural network algorithms may incorrectly predict the stock market, since the initial weight of the random selection problem can be easily prone to incorrect predictions. We consider Fleetcor Stock Decision Process with Statistical Hypothesis Testing where A is the set of discrete actions of FLT 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(Statistical Hypothesis Testing)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(Supervised Machine Learning (ML)) X S(n):→ (n+4 weeks) R = r 1 r 2 r 3

n:Time series to forecast

p:Price signals of FLT stock

j:Nash equilibria

k:Dominated move

a:Best response for target price

 

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How do AC Investment Research machine learning (predictive) algorithms actually work?

FLT Stock Forecast (Buy or Sell) for (n+4 weeks)


Sample Set: Neural Network
Stock/Index: FLT Fleetcor
Time series to forecast n: 11 Nov 2022 for (n+4 weeks)

According to price forecasts for (n+4 weeks) period: The dominant strategy among neural network is to Hold FLT 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 Fleetcor

  1. The fair value of a financial instrument at initial recognition is normally the transaction price (ie the fair value of the consideration given or received, see also paragraph B5.1.2A and IFRS 13). However, if part of the consideration given or received is for something other than the financial instrument, an entity shall measure the fair value of the financial instrument. For example, the fair value of a long-term loan or receivable that carries no interest can be measured as the present value of all future cash receipts discounted using the prevailing market rate(s) of interest for a similar instrument (similar as to currency, term, type of interest rate and other factors) with a similar credit rating. Any additional amount lent is an expense or a reduction of income unless it qualifies for recognition as some other type of asset.
  2. When designating a hedging relationship and on an ongoing basis, an entity shall analyse the sources of hedge ineffectiveness that are expected to affect the hedging relationship during its term. This analysis (including any updates in accordance with paragraph B6.5.21 arising from rebalancing a hedging relationship) is the basis for the entity's assessment of meeting the hedge effectiveness requirements.
  3. An embedded prepayment option in an interest-only or principal-only strip is closely related to the host contract provided the host contract (i) initially resulted from separating the right to receive contractual cash flows of a financial instrument that, in and of itself, did not contain an embedded derivative, and (ii) does not contain any terms not present in the original host debt contract.
  4. Paragraph 5.7.5 permits an entity to make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of particular investments in equity instruments. Such an investment is not a monetary item. Accordingly, the gain or loss that is presented in other comprehensive income in accordance with paragraph 5.7.5 includes any related foreign exchange component.

*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

Fleetcor assigned short-term B1 & long-term B1 forecasted stock rating. We evaluate the prediction models Supervised Machine Learning (ML) with Statistical Hypothesis Testing1,2,3,4 and conclude that the FLT stock is predictable in the short/long term. According to price forecasts for (n+4 weeks) period: The dominant strategy among neural network is to Hold FLT stock.

Financial State Forecast for FLT Fleetcor Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B1B1
Operational Risk 8247
Market Risk4159
Technical Analysis8873
Fundamental Analysis6250
Risk Unsystematic3452

Prediction Confidence Score

Trust metric by Neural Network: 82 out of 100 with 854 signals.

References

  1. Banerjee, A., J. J. Dolado, J. W. Galbraith, D. F. Hendry (1993), Co-integration, Error-correction, and the Econometric Analysis of Non-stationary Data. Oxford: Oxford University Press.
  2. Nie X, Wager S. 2019. Quasi-oracle estimation of heterogeneous treatment effects. arXiv:1712.04912 [stat.ML]
  3. E. Altman. Constrained Markov decision processes, volume 7. CRC Press, 1999
  4. Thomas P, Brunskill E. 2016. Data-efficient off-policy policy evaluation for reinforcement learning. In Pro- ceedings of the International Conference on Machine Learning, pp. 2139–48. La Jolla, CA: Int. Mach. Learn. Soc.
  5. 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.
  6. E. Collins. Using Markov decision processes to optimize a nonlinear functional of the final distribution, with manufacturing applications. In Stochastic Modelling in Innovative Manufacturing, pages 30–45. Springer, 1997
  7. V. Mnih, K. Kavukcuoglu, D. Silver, A. Rusu, J. Veness, M. Bellemare, A. Graves, M. Riedmiller, A. Fidjeland, G. Ostrovski, S. Petersen, C. Beattie, A. Sadik, I. Antonoglou, H. King, D. Kumaran, D. Wierstra, S. Legg, and D. Hassabis. Human-level control through deep reinforcement learning. Nature, 518(7540):529–533, 02 2015.
Frequently Asked QuestionsQ: What is the prediction methodology for FLT stock?
A: FLT stock prediction methodology: We evaluate the prediction models Supervised Machine Learning (ML) and Statistical Hypothesis Testing
Q: Is FLT stock a buy or sell?
A: The dominant strategy among neural network is to Hold FLT Stock.
Q: Is Fleetcor stock a good investment?
A: The consensus rating for Fleetcor is Hold and assigned short-term B1 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of FLT stock?
A: The consensus rating for FLT is Hold.
Q: What is the prediction period for FLT stock?
A: The prediction period for FLT is (n+4 weeks)

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