Modelling A.I. in Economics

Euro Stoxx 50 Index assigned short-term B2 & long-term Ba3 forecasted stock rating.

Accurate prediction of stock market returns is a very challenging task due to volatile and non-linear nature of the financial stock markets. With the introduction of artificial intelligence and increased computational capabilities, programmed methods of prediction have proved to be more efficient in predicting stock prices. We evaluate Euro Stoxx 50 Index prediction models with Multi-Task Learning (ML) and Logistic Regression1,2,3,4 and conclude that the Euro Stoxx 50 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 Euro Stoxx 50 Index stock.


Keywords: Euro Stoxx 50 Index, Euro Stoxx 50 Index, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. Game Theory
  2. How do you know when a stock will go up or down?
  3. Trading Interaction

Euro Stoxx 50 Index Target Price Prediction Modeling Methodology

Stock market prediction is a crucial and challenging task due to its nonlinear, evolutionary, complex, and dynamic nature. Research on the stock market has been an important issue for researchers in recent years. Companies invest in trading the stock market. Predicting the stock market trend accurately will minimize the risk and bring a maximum amount of profit for all the stakeholders. During the last several years, a lot of studies have been done to predict stock market trends using Traditional, Machine learning and deep learning techniques. We consider Euro Stoxx 50 Index Stock Decision Process with Logistic Regression where A is the set of discrete actions of Euro Stoxx 50 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(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(Multi-Task Learning (ML)) X S(n):→ (n+8 weeks) i = 1 n a i

n:Time series to forecast

p:Price signals of Euro Stoxx 50 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?

Euro Stoxx 50 Index Stock Forecast (Buy or Sell) for (n+8 weeks)


Sample Set: Neural Network
Stock/Index: Euro Stoxx 50 Index Euro Stoxx 50 Index
Time series to forecast n: 07 Nov 2022 for (n+8 weeks)

According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Hold Euro Stoxx 50 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 Euro Stoxx 50 Index

  1. The following are examples of when the objective of the entity's business model may be achieved by both collecting contractual cash flows and selling financial assets. This list of examples is not exhaustive. Furthermore, the examples are not intended to describe all the factors that may be relevant to the assessment of the entity's business model nor specify the relative importance of the factors.
  2. However, an entity is not required to separately recognise interest revenue or impairment gains or losses for a financial asset measured at fair value through profit or loss. Consequently, when an entity reclassifies a financial asset out of the fair value through profit or loss measurement category, the effective interest rate is determined on the basis of the fair value of the asset at the reclassification date. In addition, for the purposes of applying Section 5.5 to the financial asset from the reclassification date, the date of the reclassification is treated as the date of initial recognition.
  3. Annual Improvements to IFRS Standards 2018–2020, issued in May 2020, added paragraphs 7.2.35 and B3.3.6A and amended paragraph B3.3.6. An entity shall apply that amendment for annual reporting periods beginning on or after 1 January 2022. Earlier application is permitted. If an entity applies the amendment for an earlier period, it shall disclose that fact.
  4. If the contractual cash flows on a financial asset have been renegotiated or otherwise modified, but the financial asset is not derecognised, that financial asset is not automatically considered to have lower credit risk. An entity shall assess whether there has been a significant increase in credit risk since initial recognition on the basis of all reasonable and supportable information that is available without undue cost or effort. This includes historical and forwardlooking information and an assessment of the credit risk over the expected life of the financial asset, which includes information about the circumstances that led to the modification. Evidence that the criteria for the recognition of lifetime expected credit losses are no longer met may include a history of up-to-date and timely payment performance against the modified contractual terms. Typically a customer would need to demonstrate consistently good payment behaviour over a period of time before the credit risk is considered to have decreased.

*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

Euro Stoxx 50 Index assigned short-term B2 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Multi-Task Learning (ML) with Logistic Regression1,2,3,4 and conclude that the Euro Stoxx 50 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 Euro Stoxx 50 Index stock.

Financial State Forecast for Euro Stoxx 50 Index Euro Stoxx 50 Index Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B2Ba3
Operational Risk 5544
Market Risk7288
Technical Analysis6990
Fundamental Analysis3645
Risk Unsystematic5643

Prediction Confidence Score

Trust metric by Neural Network: 87 out of 100 with 796 signals.

References

  1. Semenova V, Goldman M, Chernozhukov V, Taddy M. 2018. Orthogonal ML for demand estimation: high dimensional causal inference in dynamic panels. arXiv:1712.09988 [stat.ML]
  2. Mullainathan S, Spiess J. 2017. Machine learning: an applied econometric approach. J. Econ. Perspect. 31:87–106
  3. Dudik M, Erhan D, Langford J, Li L. 2014. Doubly robust policy evaluation and optimization. Stat. Sci. 29:485–511
  4. Belsley, D. A. (1988), "Modelling and forecast reliability," International Journal of Forecasting, 4, 427–447.
  5. Chipman HA, George EI, McCulloch RE. 2010. Bart: Bayesian additive regression trees. Ann. Appl. Stat. 4:266–98
  6. Breiman L. 2001b. Statistical modeling: the two cultures (with comments and a rejoinder by the author). Stat. Sci. 16:199–231
  7. Firth JR. 1957. A synopsis of linguistic theory 1930–1955. In Studies in Linguistic Analysis (Special Volume of the Philological Society), ed. JR Firth, pp. 1–32. Oxford, UK: Blackwell
Frequently Asked QuestionsQ: What is the prediction methodology for Euro Stoxx 50 Index stock?
A: Euro Stoxx 50 Index stock prediction methodology: We evaluate the prediction models Multi-Task Learning (ML) and Logistic Regression
Q: Is Euro Stoxx 50 Index stock a buy or sell?
A: The dominant strategy among neural network is to Hold Euro Stoxx 50 Index Stock.
Q: Is Euro Stoxx 50 Index stock a good investment?
A: The consensus rating for Euro Stoxx 50 Index is Hold and assigned short-term B2 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of Euro Stoxx 50 Index stock?
A: The consensus rating for Euro Stoxx 50 Index is Hold.
Q: What is the prediction period for Euro Stoxx 50 Index stock?
A: The prediction period for Euro Stoxx 50 Index is (n+8 weeks)

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