Can we predict stock market using machine learning? (LON:HEFT Stock Forecast)

The nature of stock market movement has always been ambiguous for investors because of various influential factors. This study aims to significantly reduce the risk of trend prediction with machine learning and deep learning algorithms. We evaluate HENDERSON EUROPEAN FOCUS TRUST PLC prediction models with Multi-Instance Learning (ML) and Pearson Correlation1,2,3,4 and conclude that the LON:HEFT 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 Hold LON:HEFT stock.


Keywords: LON:HEFT, HENDERSON EUROPEAN FOCUS TRUST PLC, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. Should I buy stocks now or wait amid such uncertainty?
  2. Market Outlook
  3. How do predictive algorithms actually work?

LON:HEFT Target Price Prediction Modeling Methodology

The research reported in the paper focuses on the stock market prediction problem, the main aim being the development of a methodology to forecast the stock closing price. The methodology is based on some novel variable selection methods and an analysis of neural network and support vector machines based prediction models. Also, a hybrid approach which combines the use of the variables derived from technical and fundamental analysis of stock market indicators in order to improve prediction results of the proposed approaches is reported in this paper. We consider HENDERSON EUROPEAN FOCUS TRUST PLC Stock Decision Process with Pearson Correlation where A is the set of discrete actions of LON:HEFT 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(Pearson Correlation)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-Instance Learning (ML)) X S(n):→ (n+3 month) i = 1 n r i

n:Time series to forecast

p:Price signals of LON:HEFT 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:HEFT Stock Forecast (Buy or Sell) for (n+3 month)


Sample Set: Neural Network
Stock/Index: LON:HEFT HENDERSON EUROPEAN FOCUS TRUST PLC
Time series to forecast n: 11 Nov 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Hold LON:HEFT 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 HENDERSON EUROPEAN FOCUS TRUST PLC

  1. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss. However, the entity may transfer the cumulative gain or loss within equity.
  2. Changes in market conditions that give rise to market risk include changes in a benchmark interest rate, the price of another entity's financial instrument, a commodity price, a foreign exchange rate or an index of prices or rates.
  3. For the purposes of applying the requirements in paragraphs 5.7.7 and 5.7.8, an accounting mismatch is not caused solely by the measurement method that an entity uses to determine the effects of changes in a liability's credit risk. An accounting mismatch in profit or loss would arise only when the effects of changes in the liability's credit risk (as defined in IFRS 7) are expected to be offset by changes in the fair value of another financial instrument. A mismatch that arises solely as a result of the measurement method (ie because an entity does not isolate changes in a liability's credit risk from some other changes in its fair value) does not affect the determination required by paragraphs 5.7.7 and 5.7.8. For example, an entity may not isolate changes in a liability's credit risk from changes in liquidity risk. If the entity presents the combined effect of both factors in other comprehensive income, a mismatch may occur because changes in liquidity risk may be included in the fair value measurement of the entity's financial assets and the entire fair value change of those assets is presented in profit or loss. However, such a mismatch is caused by measurement imprecision, not the offsetting relationship described in paragraph B5.7.6 and, therefore, does not affect the determination required by paragraphs 5.7.7 and 5.7.8.
  4. For a discontinued hedging relationship, when the interest rate benchmark on which the hedged future cash flows had been based is changed as required by interest rate benchmark reform, for the purpose of applying paragraph 6.5.12 in order to determine whether the hedged future cash flows are expected to occur, the amount accumulated in the cash flow hedge reserve for that hedging relationship shall be deemed to be based on the alternative benchmark rate on which the hedged future cash flows will be based.

*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

HENDERSON EUROPEAN FOCUS TRUST PLC assigned short-term Ba3 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Multi-Instance Learning (ML) with Pearson Correlation1,2,3,4 and conclude that the LON:HEFT 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 Hold LON:HEFT stock.

Financial State Forecast for LON:HEFT HENDERSON EUROPEAN FOCUS TRUST PLC Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba3Ba3
Operational Risk 7790
Market Risk7082
Technical Analysis3538
Fundamental Analysis4970
Risk Unsystematic8336

Prediction Confidence Score

Trust metric by Neural Network: 76 out of 100 with 671 signals.

References

  1. R. Sutton, D. McAllester, S. Singh, and Y. Mansour. Policy gradient methods for reinforcement learning with function approximation. In Proceedings of Advances in Neural Information Processing Systems 12, pages 1057–1063, 2000
  2. Bai J, Ng S. 2002. Determining the number of factors in approximate factor models. Econometrica 70:191–221
  3. S. J. Russell and A. Zimdars. Q-decomposition for reinforcement learning agents. In Machine Learning, Proceedings of the Twentieth International Conference (ICML 2003), August 21-24, 2003, Washington, DC, USA, pages 656–663, 2003.
  4. Bengio Y, Ducharme R, Vincent P, Janvin C. 2003. A neural probabilistic language model. J. Mach. Learn. Res. 3:1137–55
  5. Bertsimas D, King A, Mazumder R. 2016. Best subset selection via a modern optimization lens. Ann. Stat. 44:813–52
  6. Tibshirani R, Hastie T. 1987. Local likelihood estimation. J. Am. Stat. Assoc. 82:559–67
  7. Andrews, D. W. K. W. Ploberger (1994), "Optimal tests when a nuisance parameter is present only under the alternative," Econometrica, 62, 1383–1414.
Frequently Asked QuestionsQ: What is the prediction methodology for LON:HEFT stock?
A: LON:HEFT stock prediction methodology: We evaluate the prediction models Multi-Instance Learning (ML) and Pearson Correlation
Q: Is LON:HEFT stock a buy or sell?
A: The dominant strategy among neural network is to Hold LON:HEFT Stock.
Q: Is HENDERSON EUROPEAN FOCUS TRUST PLC stock a good investment?
A: The consensus rating for HENDERSON EUROPEAN FOCUS TRUST PLC is Hold and assigned short-term Ba3 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of LON:HEFT stock?
A: The consensus rating for LON:HEFT is Hold.
Q: What is the prediction period for LON:HEFT stock?
A: The prediction period for LON:HEFT is (n+3 month)

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