Can stock prices be predicted? (NASDAQ Composite Index Stock Forecast)

Stock market is considered chaotic, complex, volatile and dynamic. Undoubtedly, its prediction is one of the most challenging tasks in time series forecasting. Moreover existing Artificial Neural Network (ANN) approaches fail to provide encouraging results. Meanwhile advances in machine learning have presented favourable results for speech recognition, image classification and language processing. We evaluate NASDAQ Composite Index prediction models with Modular Neural Network (DNN Layer) and Sign Test^1,2,3,4 and conclude that the NASDAQ Composite Index 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 NASDAQ Composite Index stock.

Keywords: NASDAQ Composite Index, NASDAQ Composite Index, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

1. Trust metric by Neural Network
2. What are main components of Markov decision process?
3. Probability Distribution

NASDAQ Composite Index Target Price Prediction Modeling Methodology

Prediction of stock market is a long-time attractive topic to researchers from different fields. In particular, numerous studies have been conducted to predict the movement of stock market using machine learning algorithms such as support vector machine (SVM) and reinforcement learning. In this project, we propose a new prediction algorithm that exploits the temporal correlation among global stock markets and various financial products to predict the next-day stock trend. We consider NASDAQ Composite Index Stock Decision Process with Sign Test where A is the set of discrete actions of NASDAQ Composite Index 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(Sign Test)^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(Modular Neural Network (DNN Layer)) X S(n):→ (n+8 weeks) $\sum _{i=1}^n\left(s_i\right)$

n:Time series to forecast

p:Price signals of NASDAQ Composite Index 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?

NASDAQ Composite Index Stock Forecast (Buy or Sell) for (n+8 weeks)

Sample Set: Neural Network
Stock/Index: NASDAQ Composite Index NASDAQ Composite Index
Time series to forecast n: 17 Nov 2022 for (n+8 weeks)

According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Hold NASDAQ Composite Index 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 NASDAQ Composite Index

1. 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.
2. An entity shall amend a hedging relationship as required in paragraph 6.9.1 by the end of the reporting period during which a change required by interest rate benchmark reform is made to the hedged risk, hedged item or hedging instrument. For the avoidance of doubt, such an amendment to the formal designation of a hedging relationship constitutes neither the discontinuation of the hedging relationship nor the designation of a new hedging relationship.
3. As noted in paragraph B4.3.1, when an entity becomes a party to a hybrid contract with a host that is not an asset within the scope of this Standard and with one or more embedded derivatives, paragraph 4.3.3 requires the entity to identify any such embedded derivative, assess whether it is required to be separated from the host contract and, for those that are required to be separated, measure the derivatives at fair value at initial recognition and subsequently. These requirements can be more complex, or result in less reliable measures, than measuring the entire instrument at fair value through profit or loss. For that reason this Standard permits the entire hybrid contract to be designated as at fair value through profit or loss.
4. Leverage is a contractual cash flow characteristic of some financial assets. Leverage increases the variability of the contractual cash flows with the result that they do not have the economic characteristics of interest. Stand-alone option, forward and swap contracts are examples of financial assets that include such leverage. Thus, such contracts do not meet the condition in paragraphs 4.1.2(b) and 4.1.2A(b) and cannot be subsequently measured at amortised cost or fair value through other comprehensive income.

*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

NASDAQ Composite Index assigned short-term Ba3 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (DNN Layer) with Sign Test^1,2,3,4 and conclude that the NASDAQ Composite Index 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 NASDAQ Composite Index stock.

Financial State Forecast for NASDAQ Composite Index NASDAQ Composite Index Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	Ba3	Ba3
Operational Risk	81	72
Market Risk	62	61
Technical Analysis	69	46
Fundamental Analysis	41	52
Risk Unsystematic	69	82

Prediction Confidence Score

Trust metric by Neural Network: 74 out of 100 with 724 signals.

References

1. Christou, C., P. A. V. B. Swamy G. S. Tavlas (1996), "Modelling optimal strategies for the allocation of wealth in multicurrency investments," International Journal of Forecasting, 12, 483–493.
2. Cortes C, Vapnik V. 1995. Support-vector networks. Mach. Learn. 20:273–97
3. M. J. Hausknecht and P. Stone. Deep recurrent Q-learning for partially observable MDPs. CoRR, abs/1507.06527, 2015
4. Angrist JD, Pischke JS. 2008. Mostly Harmless Econometrics: An Empiricist's Companion. Princeton, NJ: Princeton Univ. Press
5. Matzkin RL. 1994. Restrictions of economic theory in nonparametric methods. In Handbook of Econometrics, Vol. 4, ed. R Engle, D McFadden, pp. 2523–58. Amsterdam: Elsevier
6. Doudchenko N, Imbens GW. 2016. Balancing, regression, difference-in-differences and synthetic control methods: a synthesis. NBER Work. Pap. 22791
7. Ruiz FJ, Athey S, Blei DM. 2017. SHOPPER: a probabilistic model of consumer choice with substitutes and complements. arXiv:1711.03560 [stat.ML]

Frequently Asked Questions

Q: What is the prediction methodology for NASDAQ Composite Index stock?
A: NASDAQ Composite Index stock prediction methodology: We evaluate the prediction models Modular Neural Network (DNN Layer) and Sign Test
Q: Is NASDAQ Composite Index stock a buy or sell?
A: The dominant strategy among neural network is to Hold NASDAQ Composite Index Stock.
Q: Is NASDAQ Composite Index stock a good investment?
A: The consensus rating for NASDAQ Composite Index is Hold and assigned short-term Ba3 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of NASDAQ Composite Index stock?
A: The consensus rating for NASDAQ Composite Index is Hold.
Q: What is the prediction period for NASDAQ Composite Index stock?
A: The prediction period for NASDAQ Composite Index is (n+8 weeks)

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