Modelling A.I. in Economics

Can neural networks predict stock market? (LON:AEET Stock Forecast)

This study presents financial network indicators that can be applied to global stock market investment strategies. We propose to design both undirected and directed volatility networks of global stock market based on simple pair-wise correlation and system-wide connectedness of stock date using a vector auto-regressive model. We evaluate AQUILA ENERGY EFFICIENCY TRUST PLC prediction models with Modular Neural Network (Financial Sentiment Analysis) and Statistical Hypothesis Testing1,2,3,4 and conclude that the LON:AEET stock is predictable in the short/long term. According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold LON:AEET stock.


Keywords: LON:AEET, AQUILA ENERGY EFFICIENCY TRUST PLC, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. Why do we need predictive models?
  2. How do you decide buy or sell a stock?
  3. How do predictive algorithms actually work?

LON:AEET Target Price Prediction Modeling Methodology

In the business sector, it has always been a difficult task to predict the exact daily price of the stock market index; hence, there is a great deal of research being conducted regarding the prediction of the direction of stock price index movement. Many factors such as political events, general economic conditions, and traders' expectations may have an influence on the stock market index. There are numerous research studies that use similar indicators to forecast the direction of the stock market index. We consider AQUILA ENERGY EFFICIENCY TRUST PLC Stock Decision Process with Statistical Hypothesis Testing where A is the set of discrete actions of LON:AEET 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(Modular Neural Network (Financial Sentiment Analysis)) X S(n):→ (n+1 year) R = 1 0 0 0 1 0 0 0 1

n:Time series to forecast

p:Price signals of LON:AEET 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?

LON:AEET Stock Forecast (Buy or Sell) for (n+1 year)


Sample Set: Neural Network
Stock/Index: LON:AEET AQUILA ENERGY EFFICIENCY TRUST PLC
Time series to forecast n: 06 Nov 2022 for (n+1 year)

According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold LON:AEET 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 AQUILA ENERGY EFFICIENCY TRUST PLC

  1. Paragraph 6.3.4 permits an entity to designate as hedged items aggregated exposures that are a combination of an exposure and a derivative. When designating such a hedged item, an entity assesses whether the aggregated exposure combines an exposure with a derivative so that it creates a different aggregated exposure that is managed as one exposure for a particular risk (or risks). In that case, the entity may designate the hedged item on the basis of the aggregated exposure
  2. An entity shall apply this Standard for annual periods beginning on or after 1 January 2018. Earlier application is permitted. If an entity elects to apply this Standard early, it must disclose that fact and apply all of the requirements in this Standard at the same time (but see also paragraphs 7.1.2, 7.2.21 and 7.3.2). It shall also, at the same time, apply the amendments in Appendix C.
  3. If the underlyings are not the same but are economically related, there can be situations in which the values of the hedging instrument and the hedged item move in the same direction, for example, because the price differential between the two related underlyings changes while the underlyings themselves do not move significantly. That is still consistent with an economic relationship between the hedging instrument and the hedged item if the values of the hedging instrument and the hedged item are still expected to typically move in the opposite direction when the underlyings move.
  4. The requirement that an economic relationship exists means that the hedging instrument and the hedged item have values that generally move in the opposite direction because of the same risk, which is the hedged risk. Hence, there must be an expectation that the value of the hedging instrument and the value of the hedged item will systematically change in response to movements in either the same underlying or underlyings that are economically related in such a way that they respond in a similar way to the risk that is being hedged (for example, Brent and WTI crude oil).

*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

AQUILA ENERGY EFFICIENCY TRUST PLC assigned short-term B1 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Financial Sentiment Analysis) with Statistical Hypothesis Testing1,2,3,4 and conclude that the LON:AEET stock is predictable in the short/long term. According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold LON:AEET stock.

Financial State Forecast for LON:AEET AQUILA ENERGY EFFICIENCY TRUST PLC Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B1Ba3
Operational Risk 4756
Market Risk6881
Technical Analysis7454
Fundamental Analysis3961
Risk Unsystematic8380

Prediction Confidence Score

Trust metric by Neural Network: 82 out of 100 with 823 signals.

References

  1. K. Boda and J. Filar. Time consistent dynamic risk measures. Mathematical Methods of Operations Research, 63(1):169–186, 2006
  2. Clements, M. P. D. F. Hendry (1996), "Intercept corrections and structural change," Journal of Applied Econometrics, 11, 475–494.
  3. L. Panait and S. Luke. Cooperative multi-agent learning: The state of the art. Autonomous Agents and Multi-Agent Systems, 11(3):387–434, 2005.
  4. V. Konda and J. Tsitsiklis. Actor-Critic algorithms. In Proceedings of Advances in Neural Information Processing Systems 12, pages 1008–1014, 2000
  5. Ashley, R. (1983), "On the usefulness of macroeconomic forecasts as inputs to forecasting models," Journal of Forecasting, 2, 211–223.
  6. Friedberg R, Tibshirani J, Athey S, Wager S. 2018. Local linear forests. arXiv:1807.11408 [stat.ML]
  7. Candès E, Tao T. 2007. The Dantzig selector: statistical estimation when p is much larger than n. Ann. Stat. 35:2313–51
Frequently Asked QuestionsQ: What is the prediction methodology for LON:AEET stock?
A: LON:AEET stock prediction methodology: We evaluate the prediction models Modular Neural Network (Financial Sentiment Analysis) and Statistical Hypothesis Testing
Q: Is LON:AEET stock a buy or sell?
A: The dominant strategy among neural network is to Hold LON:AEET Stock.
Q: Is AQUILA ENERGY EFFICIENCY TRUST PLC stock a good investment?
A: The consensus rating for AQUILA ENERGY EFFICIENCY TRUST PLC is Hold and assigned short-term B1 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of LON:AEET stock?
A: The consensus rating for LON:AEET is Hold.
Q: What is the prediction period for LON:AEET stock?
A: The prediction period for LON:AEET is (n+1 year)

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