Modelling A.I. in Economics

FWP Forward Pharma A/S American Depositary Shares Stock Forecast

Forward Pharma A/S American Depositary Shares Research Report

Summary

Predictions on stock market prices are a great challenge due to the fact that it is an immensely complex, chaotic and dynamic environment. There are many studies from various areas aiming to take on that challenge and Machine Learning approaches have been the focus of many of them. There are many examples of Machine Learning algorithms been able to reach satisfactory results when doing that type of prediction. This article studies the usage of LSTM networks on that scenario, to predict future trends of stock prices based on the price history, alongside with technical analysis indicators. We evaluate Forward Pharma A/S American Depositary Shares prediction models with Modular Neural Network (DNN Layer) and Pearson Correlation1,2,3,4 and conclude that the FWP 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 FWP stock.

Key Points

  1. Dominated Move
  2. Understanding Buy, Sell, and Hold Ratings
  3. How do predictive algorithms actually work?

FWP Target Price Prediction Modeling Methodology

We consider Forward Pharma A/S American Depositary Shares Stock Decision Process with Modular Neural Network (DNN Layer) where A is the set of discrete actions of FWP 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(Modular Neural Network (DNN Layer)) X S(n):→ (n+16 weeks) R = r 1 r 2 r 3

n:Time series to forecast

p:Price signals of FWP 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?

FWP Stock Forecast (Buy or Sell) for (n+16 weeks)

Sample Set: Neural Network
Stock/Index: FWP Forward Pharma A/S American Depositary Shares
Time series to forecast n: 25 Nov 2022 for (n+16 weeks)

According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Sell FWP 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 Forward Pharma A/S American Depositary Shares

  1. In some circumstances, the renegotiation or modification of the contractual cash flows of a financial asset can lead to the derecognition of the existing financial asset in accordance with this Standard. When the modification of a financial asset results in the derecognition of the existing financial asset and the subsequent recognition of the modified financial asset, the modified asset is considered a 'new' financial asset for the purposes of this Standard.
  2. The requirement that an economic relationship exists means that the hedging instrument and the hedged item have values that generally move in the opposite direction because of the same risk, which is the hedged risk. Hence, there must be an expectation that the value of the hedging instrument and the value of the hedged item will systematically change in response to movements in either the same underlying or underlyings that are economically related in such a way that they respond in a similar way to the risk that is being hedged (for example, Brent and WTI crude oil).
  3. A contractually specified inflation risk component of the cash flows of a recognised inflation-linked bond (assuming that there is no requirement to account for an embedded derivative separately) is separately identifiable and reliably measurable, as long as other cash flows of the instrument are not affected by the inflation risk component.
  4. If the group of items does not have any offsetting risk positions (for example, a group of foreign currency expenses that affect different line items in the statement of profit or loss and other comprehensive income that are hedged for foreign currency risk) then the reclassified hedging instrument gains or losses shall be apportioned to the line items affected by the hedged items. This apportionment shall be done on a systematic and rational basis and shall not result in the grossing up of the net gains or losses arising from a single hedging instrument.

*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

Forward Pharma A/S American Depositary Shares assigned short-term Ba2 & long-term B1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (DNN Layer) with Pearson Correlation1,2,3,4 and conclude that the FWP 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 FWP stock.

Financial State Forecast for FWP Forward Pharma A/S American Depositary Shares Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba2B1
Operational Risk 6745
Market Risk5082
Technical Analysis7962
Fundamental Analysis8351
Risk Unsystematic6363

Prediction Confidence Score

Trust metric by Neural Network: 84 out of 100 with 610 signals.

References

  1. Bewley, R. M. Yang (1998), "On the size and power of system tests for cointegration," Review of Economics and Statistics, 80, 675–679.
  2. Gentzkow M, Kelly BT, Taddy M. 2017. Text as data. NBER Work. Pap. 23276
  3. Ashley, R. (1983), "On the usefulness of macroeconomic forecasts as inputs to forecasting models," Journal of Forecasting, 2, 211–223.
  4. Farrell MH, Liang T, Misra S. 2018. Deep neural networks for estimation and inference: application to causal effects and other semiparametric estimands. arXiv:1809.09953 [econ.EM]
  5. Y. Le Tallec. Robust, risk-sensitive, and data-driven control of Markov decision processes. PhD thesis, Massachusetts Institute of Technology, 2007.
  6. P. Artzner, F. Delbaen, J. Eber, and D. Heath. Coherent measures of risk. Journal of Mathematical Finance, 9(3):203–228, 1999
  7. Imbens GW, Lemieux T. 2008. Regression discontinuity designs: a guide to practice. J. Econom. 142:615–35
Frequently Asked QuestionsQ: What is the prediction methodology for FWP stock?
A: FWP stock prediction methodology: We evaluate the prediction models Modular Neural Network (DNN Layer) and Pearson Correlation
Q: Is FWP stock a buy or sell?
A: The dominant strategy among neural network is to Sell FWP Stock.
Q: Is Forward Pharma A/S American Depositary Shares stock a good investment?
A: The consensus rating for Forward Pharma A/S American Depositary Shares is Sell and assigned short-term Ba2 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of FWP stock?
A: The consensus rating for FWP is Sell.
Q: What is the prediction period for FWP stock?
A: The prediction period for FWP is (n+16 weeks)



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