Modelling A.I. in Economics

Can stock prices be predicted? (KSS Stock Forecast) (Forecast)

The stock market is one of the key sectors of a country's economy. It provides investors with an opportunity to invest and gain returns on their investment. Predicting the stock market is a very challenging task and has attracted serious interest from researchers from many fields such as statistics, artificial intelligence, economics, and finance. An accurate prediction of the stock market reduces investment risk in the market. Different approaches have been used to predict the stock market. The performances of Machine learning (ML) models are typically superior to those of statistical and econometric models. We evaluate Kohl's prediction models with Modular Neural Network (CNN Layer) and Logistic Regression1,2,3,4 and conclude that the KSS 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 Hold KSS stock.


Keywords: KSS, Kohl's, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. Short/Long Term Stocks
  2. Nash Equilibria
  3. Operational Risk

KSS Target Price Prediction Modeling Methodology

With technological advancements, big data can be easily generated and collected in many applications. Embedded in these big data are useful information and knowledge that can be discovered by machine learning and data mining models, techniques or algorithms. We consider Kohl's Stock Decision Process with Logistic Regression where A is the set of discrete actions of KSS 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(Logistic 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(Modular Neural Network (CNN Layer)) X S(n):→ (n+6 month) r s rs

n:Time series to forecast

p:Price signals of KSS 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?

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


Sample Set: Neural Network
Stock/Index: KSS Kohl's
Time series to forecast n: 10 Nov 2022 for (n+6 month)

According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold KSS 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 Kohl's

  1. If the group of items does have offsetting risk positions (for example, a group of sales and expenses denominated in a foreign currency hedged together for foreign currency risk) then an entity shall present the hedging gains or losses in a separate line item in the statement of profit or loss and other comprehensive income. Consider, for example, a hedge of the foreign currency risk of a net position of foreign currency sales of FC100 and foreign currency expenses of FC80 using a forward exchange contract for FC20. The gain or loss on the forward exchange contract that is reclassified from the cash flow hedge reserve to profit or loss (when the net position affects profit or loss) shall be presented in a separate line item from the hedged sales and expenses. Moreover, if the sales occur in an earlier period than the expenses, the sales revenue is still measured at the spot exchange rate in accordance with IAS 21. The related hedging gain or loss is presented in a separate line item, so that profit or loss reflects the effect of hedging the net position, with a corresponding adjustment to the cash flow hedge reserve. When the hedged expenses affect profit or loss in a later period, the hedging gain or loss previously recognised in the cash flow hedge reserve on the sales is reclassified to profit or loss and presented as a separate line item from those that include the hedged expenses, which are measured at the spot exchange rate in accordance with IAS 21.
  2. When measuring the fair values of the part that continues to be recognised and the part that is derecognised for the purposes of applying paragraph 3.2.13, an entity applies the fair value measurement requirements in IFRS 13 Fair Value Measurement in addition to paragraph 3.2.14.
  3. 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.
  4. If an entity originates a loan that bears an off-market interest rate (eg 5 per cent when the market rate for similar loans is 8 per cent), and receives an upfront fee as compensation, the entity recognises the loan at its fair value, ie net of the fee it receives.

*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

Kohl's assigned short-term Ba3 & long-term B1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (CNN Layer) with Logistic Regression1,2,3,4 and conclude that the KSS 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 Hold KSS stock.

Financial State Forecast for KSS Kohl's Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba3B1
Operational Risk 7683
Market Risk3483
Technical Analysis6149
Fundamental Analysis6139
Risk Unsystematic8842

Prediction Confidence Score

Trust metric by Neural Network: 90 out of 100 with 480 signals.

References

  1. Chen X. 2007. Large sample sieve estimation of semi-nonparametric models. In Handbook of Econometrics, Vol. 6B, ed. JJ Heckman, EE Learner, pp. 5549–632. Amsterdam: Elsevier
  2. Breiman L. 1993. Better subset selection using the non-negative garotte. Tech. Rep., Univ. Calif., Berkeley
  3. O. Bardou, N. Frikha, and G. Pag`es. Computing VaR and CVaR using stochastic approximation and adaptive unconstrained importance sampling. Monte Carlo Methods and Applications, 15(3):173–210, 2009.
  4. Allen, P. G. (1994), "Economic forecasting in agriculture," International Journal of Forecasting, 10, 81–135.
  5. Chipman HA, George EI, McCulloch RE. 2010. Bart: Bayesian additive regression trees. Ann. Appl. Stat. 4:266–98
  6. V. Borkar. A sensitivity formula for the risk-sensitive cost and the actor-critic algorithm. Systems & Control Letters, 44:339–346, 2001
  7. D. S. Bernstein, S. Zilberstein, and N. Immerman. The complexity of decentralized control of Markov Decision Processes. In UAI '00: Proceedings of the 16th Conference in Uncertainty in Artificial Intelligence, Stanford University, Stanford, California, USA, June 30 - July 3, 2000, pages 32–37, 2000.
Frequently Asked QuestionsQ: What is the prediction methodology for KSS stock?
A: KSS stock prediction methodology: We evaluate the prediction models Modular Neural Network (CNN Layer) and Logistic Regression
Q: Is KSS stock a buy or sell?
A: The dominant strategy among neural network is to Hold KSS Stock.
Q: Is Kohl's stock a good investment?
A: The consensus rating for Kohl's is Hold and assigned short-term Ba3 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of KSS stock?
A: The consensus rating for KSS is Hold.
Q: What is the prediction period for KSS stock?
A: The prediction period for KSS is (n+6 month)

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