Dow Jones Shanghai Index Research Report

## Summary

Prediction of future movement of stock prices has been a subject matter of many research work. In this work, we propose a hybrid approach for stock price prediction using machine learning and deep learning-based methods. We evaluate Dow Jones Shanghai Index prediction models with Modular Neural Network (Emotional Trigger/Responses Analysis) and ElasticNet Regression1,2,3,4 and conclude that the Dow Jones Shanghai Index stock is predictable in the short/long term. According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Sell Dow Jones Shanghai Index stock.

## Key Points

1. Operational Risk
2. Can machine learning predict?
3. How accurate is machine learning in stock market?

## Dow Jones Shanghai Index Target Price Prediction Modeling Methodology

We consider Dow Jones Shanghai Index Stock Decision Process with Modular Neural Network (Emotional Trigger/Responses Analysis) where A is the set of discrete actions of Dow Jones Shanghai 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(ElasticNet Regression)5,6,7= $\begin{array}{cccc}{p}_{a1}& {p}_{a2}& \dots & {p}_{1n}\\ & ⋮\\ {p}_{j1}& {p}_{j2}& \dots & {p}_{jn}\\ & ⋮\\ {p}_{k1}& {p}_{k2}& \dots & {p}_{kn}\\ & ⋮\\ {p}_{n1}& {p}_{n2}& \dots & {p}_{nn}\end{array}$ X R(Modular Neural Network (Emotional Trigger/Responses Analysis)) X S(n):→ (n+16 weeks) $\begin{array}{l}\int {r}^{s}\mathrm{rs}\end{array}$

n:Time series to forecast

p:Price signals of Dow Jones Shanghai Index 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?

## Dow Jones Shanghai Index Stock Forecast (Buy or Sell) for (n+16 weeks)

Sample Set: Neural Network
Stock/Index: Dow Jones Shanghai Index Dow Jones Shanghai Index
Time series to forecast n: 18 Nov 2022 for (n+16 weeks)

According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Sell Dow Jones Shanghai 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 Dow Jones Shanghai Index

1. At the date of initial application, an entity is permitted to make the designation in paragraph 2.5 for contracts that already exist on the date but only if it designates all similar contracts. The change in the net assets resulting from such designations shall be recognised in retained earnings at the date of initial application.
2. Conversely, if the critical terms of the hedging instrument and the hedged item are not closely aligned, there is an increased level of uncertainty about the extent of offset. Consequently, the hedge effectiveness during the term of the hedging relationship is more difficult to predict. In such a situation it might only be possible for an entity to conclude on the basis of a quantitative assessment that an economic relationship exists between the hedged item and the hedging instrument (see paragraphs B6.4.4–B6.4.6). In some situations a quantitative assessment might also be needed to assess whether the hedge ratio used for designating the hedging relationship meets the hedge effectiveness requirements (see paragraphs B6.4.9–B6.4.11). An entity can use the same or different methods for those two different purposes.
3. A single hedging instrument may be designated as a hedging instrument of more than one type of risk, provided that there is a specific designation of the hedging instrument and of the different risk positions as hedged items. Those hedged items can be in different hedging relationships.
4. 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.

*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

Dow Jones Shanghai Index assigned short-term Ba3 & long-term Baa2 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Emotional Trigger/Responses Analysis) with ElasticNet Regression1,2,3,4 and conclude that the Dow Jones Shanghai Index stock is predictable in the short/long term. According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Sell Dow Jones Shanghai Index stock.

### Financial State Forecast for Dow Jones Shanghai Index Dow Jones Shanghai Index Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba3Baa2
Operational Risk 3389
Market Risk6881
Technical Analysis5587
Fundamental Analysis7782
Risk Unsystematic8152

### Prediction Confidence Score

Trust metric by Neural Network: 86 out of 100 with 699 signals.

## References

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2. M. J. Hausknecht. Cooperation and Communication in Multiagent Deep Reinforcement Learning. PhD thesis, The University of Texas at Austin, 2016
3. Rosenbaum PR, Rubin DB. 1983. The central role of the propensity score in observational studies for causal effects. Biometrika 70:41–55
4. Athey S. 2017. Beyond prediction: using big data for policy problems. Science 355:483–85
5. M. Ono, M. Pavone, Y. Kuwata, and J. Balaram. Chance-constrained dynamic programming with application to risk-aware robotic space exploration. Autonomous Robots, 39(4):555–571, 2015
6. 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
7. Imai K, Ratkovic M. 2013. Estimating treatment effect heterogeneity in randomized program evaluation. Ann. Appl. Stat. 7:443–70
Frequently Asked QuestionsQ: What is the prediction methodology for Dow Jones Shanghai Index stock?
A: Dow Jones Shanghai Index stock prediction methodology: We evaluate the prediction models Modular Neural Network (Emotional Trigger/Responses Analysis) and ElasticNet Regression
Q: Is Dow Jones Shanghai Index stock a buy or sell?
A: The dominant strategy among neural network is to Sell Dow Jones Shanghai Index Stock.
Q: Is Dow Jones Shanghai Index stock a good investment?
A: The consensus rating for Dow Jones Shanghai Index is Sell and assigned short-term Ba3 & long-term Baa2 forecasted stock rating.
Q: What is the consensus rating of Dow Jones Shanghai Index stock?
A: The consensus rating for Dow Jones Shanghai Index is Sell.
Q: What is the prediction period for Dow Jones Shanghai Index stock?
A: The prediction period for Dow Jones Shanghai Index is (n+16 weeks)