Can stock prices be predicted? (GME Stock Forecast)

GameStop Research Report

Summary

Social media comments have in the past had an instantaneous effect on stock markets. This paper investigates the sentiments expressed on the social media platform Twitter and their pr edictive impact on the Stock Market. We evaluate GameStop prediction models with Multi-Task Learning (ML) and Factor1,2,3,4 and conclude that the GME 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 Buy GME stock.

Key Points

  1. Is now good time to invest?
  2. What is Markov decision process in reinforcement learning?
  3. What is neural prediction?

GME Target Price Prediction Modeling Methodology

We consider GameStop Stock Decision Process with Multi-Task Learning (ML) where A is the set of discrete actions of GME 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(Factor)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(Multi-Task Learning (ML)) X S(n):→ (n+3 month) S = s 1 s 2 s 3

n:Time series to forecast

p:Price signals of GME 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?

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

Sample Set: Neural Network
Stock/Index: GME GameStop
Time series to forecast n: 20 Nov 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Buy GME 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 GameStop

  1. An entity's documentation of the hedging relationship includes how it will assess the hedge effectiveness requirements, including the method or methods used. The documentation of the hedging relationship shall be updated for any changes to the methods (see paragraph B6.4.17).
  2. For a financial guarantee contract, the entity is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed. Accordingly, cash shortfalls are the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the entity expects to receive from the holder, the debtor or any other party. If the asset is fully guaranteed, the estimation of cash shortfalls for a financial guarantee contract would be consistent with the estimations of cash shortfalls for the asset subject to the guarantee
  3. The definition of a derivative in this Standard includes contracts that are settled gross by delivery of the underlying item (eg a forward contract to purchase a fixed rate debt instrument). An entity may have a contract to buy or sell a non-financial item that can be settled net in cash or another financial instrument or by exchanging financial instruments (eg a contract to buy or sell a commodity at a fixed price at a future date). Such a contract is within the scope of this Standard unless it was entered into and continues to be held for the purpose of delivery of a non-financial item in accordance with the entity's expected purchase, sale or usage requirements. However, this Standard applies to such contracts for an entity's expected purchase, sale or usage requirements if the entity makes a designation in accordance with paragraph 2.5 (see paragraphs 2.4–2.7).
  4. Interest Rate Benchmark Reform—Phase 2, which amended IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, issued in August 2020, added paragraphs 5.4.5–5.4.9, 6.8.13, Section 6.9 and paragraphs 7.2.43–7.2.46. An entity shall apply these amendments for annual periods beginning on or after 1 January 2021. Earlier application is permitted. If an entity applies these amendments for an earlier period, it shall disclose that fact.

*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

GameStop assigned short-term Baa2 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Multi-Task Learning (ML) with Factor1,2,3,4 and conclude that the GME 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 Buy GME stock.

Financial State Forecast for GME GameStop Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Baa2Ba3
Operational Risk 6363
Market Risk6768
Technical Analysis7842
Fundamental Analysis7677
Risk Unsystematic8982

Prediction Confidence Score

Trust metric by Neural Network: 78 out of 100 with 632 signals.

References

  1. Athey S, Bayati M, Imbens G, Zhaonan Q. 2019. Ensemble methods for causal effects in panel data settings. NBER Work. Pap. 25675
  2. V. Borkar. Stochastic approximation: a dynamical systems viewpoint. Cambridge University Press, 2008
  3. Burkov A. 2019. The Hundred-Page Machine Learning Book. Quebec City, Can.: Andriy Burkov
  4. M. J. Hausknecht. Cooperation and Communication in Multiagent Deep Reinforcement Learning. PhD thesis, The University of Texas at Austin, 2016
  5. Bessler, D. A. R. A. Babula, (1987), "Forecasting wheat exports: Do exchange rates matter?" Journal of Business and Economic Statistics, 5, 397–406.
  6. Hartford J, Lewis G, Taddy M. 2016. Counterfactual prediction with deep instrumental variables networks. arXiv:1612.09596 [stat.AP]
  7. Chernozhukov V, Demirer M, Duflo E, Fernandez-Val I. 2018b. Generic machine learning inference on heteroge- nous treatment effects in randomized experiments. NBER Work. Pap. 24678
Frequently Asked QuestionsQ: What is the prediction methodology for GME stock?
A: GME stock prediction methodology: We evaluate the prediction models Multi-Task Learning (ML) and Factor
Q: Is GME stock a buy or sell?
A: The dominant strategy among neural network is to Buy GME Stock.
Q: Is GameStop stock a good investment?
A: The consensus rating for GameStop is Buy and assigned short-term Baa2 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of GME stock?
A: The consensus rating for GME is Buy.
Q: What is the prediction period for GME stock?
A: The prediction period for GME is (n+3 month)

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