Can we predict stock market using machine learning? (URI Stock Forecast)

Predicting stock index with traditional time series analysis has proven to be difficult an Artificial Neural network may be suitable for the task. A Neural Network has the ability to extract useful information from large set of data. This paper presents a review of literature application of Artificial Neural Network for stock market predictions and from this literature found that Artificial Neural Network is very useful for predicting world stock markets. We evaluate United Rentals prediction models with Modular Neural Network (Market Direction Analysis) and Statistical Hypothesis Testing^1,2,3,4 and conclude that the URI 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 Sell URI stock.

Keywords: URI, United Rentals, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

1. What is the use of Markov decision process?
2. Trust metric by Neural Network
3. Trust metric by Neural Network

URI Target Price Prediction Modeling Methodology

Recently, a lot of interesting work has been done in the area of applying Machine Learning Algorithms for analyzing price patterns and predicting stock prices and index changes. Most stock traders nowadays depend on Intelligent Trading Systems which help them in predicting prices based on various situations and conditions, thereby helping them in making instantaneous investment decisions. We consider United Rentals Stock Decision Process with Statistical Hypothesis Testing where A is the set of discrete actions of URI 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(Statistical Hypothesis Testing)^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 (Market Direction Analysis)) X S(n):→ (n+3 month) $\sum _{i=1}^n\left(s_i\right)$

n:Time series to forecast

p:Price signals of URI 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?

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

Sample Set: Neural Network
Stock/Index: URI United Rentals
Time series to forecast n: 10 Nov 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Sell URI 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 United Rentals

1. For floating-rate financial assets and floating-rate financial liabilities, periodic re-estimation of cash flows to reflect the movements in the market rates of interest alters the effective interest rate. If a floating-rate financial asset or a floating-rate financial liability is recognised initially at an amount equal to the principal receivable or payable on maturity, re-estimating the future interest payments normally has no significant effect on the carrying amount of the asset or the liability.
2. When an entity designates a financial liability as at fair value through profit or loss, it must determine whether presenting in other comprehensive income the effects of changes in the liability's credit risk would create or enlarge an accounting mismatch in profit or loss. An accounting mismatch would be created or enlarged if presenting the effects of changes in the liability's credit risk in other comprehensive income would result in a greater mismatch in profit or loss than if those amounts were presented in profit or loss
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. To the extent that a transfer of a financial asset does not qualify for derecognition, the transferee does not recognise the transferred asset as its asset. The transferee derecognises the cash or other consideration paid and recognises a receivable from the transferor. If the transferor has both a right and an obligation to reacquire control of the entire transferred asset for a fixed amount (such as under a repurchase agreement), the transferee may measure its receivable at amortised cost if it meets the criteria in paragraph 4.1.2.

*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

United Rentals assigned short-term Ba2 & long-term B3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Market Direction Analysis) with Statistical Hypothesis Testing^1,2,3,4 and conclude that the URI 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 Sell URI stock.

Financial State Forecast for URI United Rentals Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	Ba2	B3
Operational Risk	65	33
Market Risk	70	34
Technical Analysis	35	74
Fundamental Analysis	88	54
Risk Unsystematic	82	30

Prediction Confidence Score

Trust metric by Neural Network: 78 out of 100 with 556 signals.

References

1. P. Marbach. Simulated-Based Methods for Markov Decision Processes. PhD thesis, Massachusetts Institute of Technology, 1998
2. Chernozhukov V, Chetverikov D, Demirer M, Duflo E, Hansen C, Newey W. 2017. Double/debiased/ Neyman machine learning of treatment effects. Am. Econ. Rev. 107:261–65
3. Cheung, Y. M.D. Chinn (1997), "Further investigation of the uncertain unit root in GNP," Journal of Business and Economic Statistics, 15, 68–73.
4. Bottou L. 1998. Online learning and stochastic approximations. In On-Line Learning in Neural Networks, ed. D Saad, pp. 9–42. New York: ACM
5. J. Peters, S. Vijayakumar, and S. Schaal. Natural actor-critic. In Proceedings of the Sixteenth European Conference on Machine Learning, pages 280–291, 2005.
6. M. Sobel. The variance of discounted Markov decision processes. Applied Probability, pages 794–802, 1982
7. D. Bertsekas. Nonlinear programming. Athena Scientific, 1999.

Frequently Asked Questions

Q: What is the prediction methodology for URI stock?
A: URI stock prediction methodology: We evaluate the prediction models Modular Neural Network (Market Direction Analysis) and Statistical Hypothesis Testing
Q: Is URI stock a buy or sell?
A: The dominant strategy among neural network is to Sell URI Stock.
Q: Is United Rentals stock a good investment?
A: The consensus rating for United Rentals is Sell and assigned short-term Ba2 & long-term B3 forecasted stock rating.
Q: What is the consensus rating of URI stock?
A: The consensus rating for URI is Sell.
Q: What is the prediction period for URI stock?
A: The prediction period for URI is (n+3 month)

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