Can stock prices be predicted? (AIZ Stock Forecast)

AIR NEW ZEALAND LIMITED Research Report

Summary

It has never been easy to invest in a set of assets, the abnormally of financial market does not allow simple models to predict future asset values with higher accuracy. Machine learning, which consist of making computers perform tasks that normally requiring human intelligence is currently the dominant trend in scientific research. This article aims to build a model using Recurrent Neural Networks (RNN) and especially Long-Short Term Memory model (LSTM) to predict future stock market values. We evaluate AIR NEW ZEALAND LIMITED prediction models with Reinforcement Machine Learning (ML) and Ridge Regression^1,2,3,4 and conclude that the AIZ 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 AIZ stock.

Key Points

1. Which neural network is best for prediction?
2. Decision Making
3. How do you decide buy or sell a stock?

AIZ Target Price Prediction Modeling Methodology

We consider AIR NEW ZEALAND LIMITED Stock Decision Process with Reinforcement Machine Learning (ML) where A is the set of discrete actions of AIZ 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(Ridge Regression)^5,6,7= $\begin{array}{cccc}{p}_{\mathrm{a}1}& p_{\mathrm{a}2}& \dots & p_{1n}\\ & ⋮\\ p_{j1}& p_{j2}& \dots & p_{jn}\\ & ⋮\\ p_{k1}& p_{k2}& \dots & p_{kn}\\ & ⋮\\ p_{n1}& p_{n2}& \dots & p_{nn}\end{array}$ X R(Reinforcement Machine Learning (ML)) X S(n):→ (n+8 weeks) $\overrightarrow{S}=\left(s_1,s_2,s_3\right)$

n:Time series to forecast

p:Price signals of AIZ 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?

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

Sample Set: Neural Network
Stock/Index: AIZ AIR NEW ZEALAND LIMITED
Time series to forecast n: 23 Nov 2022 for (n+8 weeks)

According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Hold AIZ 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 AIR NEW ZEALAND LIMITED

1. For the purpose of applying the requirement in paragraph 6.5.12 in order to determine whether the hedged future cash flows are expected to occur, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform.
2. Adjusting the hedge ratio by decreasing the volume of the hedged item does not affect how the changes in the fair value of the hedging instrument are measured. The measurement of the changes in the value of the hedged item related to the volume that continues to be designated also remains unaffected. However, from the date of rebalancing, the volume by which the hedged item was decreased is no longer part of the hedging relationship. For example, if an entity originally hedged a volume of 100 tonnes of a commodity at a forward price of CU80 and reduces that volume by 10 tonnes on rebalancing, the hedged item after rebalancing would be 90 tonnes hedged at CU80. The 10 tonnes of the hedged item that are no longer part of the hedging relationship would be accounted for in accordance with the requirements for the discontinuation of hedge accounting (see paragraphs 6.5.6–6.5.7 and B6.5.22–B6.5.28).
3. Measurement of a financial asset or financial liability and classification of recognised changes in its value are determined by the item's classification and whether the item is part of a designated hedging relationship. Those requirements can create a measurement or recognition inconsistency (sometimes referred to as an 'accounting mismatch') when, for example, in the absence of designation as at fair value through profit or loss, a financial asset would be classified as subsequently measured at fair value through profit or loss and a liability the entity considers related would be subsequently measured at amortised cost (with changes in fair value not recognised). In such circumstances, an entity may conclude that its financial statements would provide more relevant information if both the asset and the liability were measured as at fair value through profit or loss.
4. For the purpose of determining whether a forecast transaction (or a component thereof) is highly probable as required by paragraph 6.3.3, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform.

*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

AIR NEW ZEALAND LIMITED assigned short-term Ba1 & long-term B1 forecasted stock rating. We evaluate the prediction models Reinforcement Machine Learning (ML) with Ridge Regression^1,2,3,4 and conclude that the AIZ 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 AIZ stock.

Financial State Forecast for AIZ AIR NEW ZEALAND LIMITED Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	Ba1	B1
Operational Risk	83	44
Market Risk	67	59
Technical Analysis	84	49
Fundamental Analysis	87	84
Risk Unsystematic	31	59

Prediction Confidence Score

Trust metric by Neural Network: 76 out of 100 with 736 signals.

References

1. S. Devlin, L. Yliniemi, D. Kudenko, and K. Tumer. Potential-based difference rewards for multiagent reinforcement learning. In Proceedings of the Thirteenth International Joint Conference on Autonomous Agents and Multiagent Systems, May 2014
2. Arjovsky M, Bottou L. 2017. Towards principled methods for training generative adversarial networks. arXiv:1701.04862 [stat.ML]
3. Imbens GW, Rubin DB. 2015. Causal Inference in Statistics, Social, and Biomedical Sciences. Cambridge, UK: Cambridge Univ. Press
4. Bai J, Ng S. 2017. Principal components and regularized estimation of factor models. arXiv:1708.08137 [stat.ME]
5. P. Artzner, F. Delbaen, J. Eber, and D. Heath. Coherent measures of risk. Journal of Mathematical Finance, 9(3):203–228, 1999
6. Chernozhukov V, Escanciano JC, Ichimura H, Newey WK. 2016b. Locally robust semiparametric estimation. arXiv:1608.00033 [math.ST]
7. Breiman L, Friedman J, Stone CJ, Olshen RA. 1984. Classification and Regression Trees. Boca Raton, FL: CRC Press

Frequently Asked Questions

Q: What is the prediction methodology for AIZ stock?
A: AIZ stock prediction methodology: We evaluate the prediction models Reinforcement Machine Learning (ML) and Ridge Regression
Q: Is AIZ stock a buy or sell?
A: The dominant strategy among neural network is to Hold AIZ Stock.
Q: Is AIR NEW ZEALAND LIMITED stock a good investment?
A: The consensus rating for AIR NEW ZEALAND LIMITED is Hold and assigned short-term Ba1 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of AIZ stock?
A: The consensus rating for AIZ is Hold.
Q: What is the prediction period for AIZ stock?
A: The prediction period for AIZ is (n+8 weeks)

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