How accurate is machine learning in stock market? (RGLD Stock Forecast)

Royal Gold Research Report

Summary

Stock market trading is an activity in which investors need fast and accurate information to make effective decisions. Since many stocks are traded on a stock exchange, numerous factors influence the decision-making process. Moreover, the behaviour of stock prices is uncertain and hard to predict. For these reasons, stock price prediction is an important process and a challenging one. We evaluate Royal Gold prediction models with Modular Neural Network (Emotional Trigger/Responses Analysis) and Wilcoxon Sign-Rank Test^1,2,3,4 and conclude that the RGLD 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 RGLD stock.

Key Points

1. Why do we need predictive models?
2. Can we predict stock market using machine learning?
3. Game Theory

RGLD Target Price Prediction Modeling Methodology

We consider Royal Gold Stock Decision Process with Modular Neural Network (Emotional Trigger/Responses Analysis) where A is the set of discrete actions of RGLD 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(Wilcoxon Sign-Rank Test)^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 (Emotional Trigger/Responses Analysis)) X S(n):→ (n+3 month) $\begin{array}{l}\int r^s\mathrm{rs}\end{array}$

n:Time series to forecast

p:Price signals of RGLD 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?

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

Sample Set: Neural Network
Stock/Index: RGLD Royal Gold
Time series to forecast n: 21 Nov 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Sell RGLD 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 Royal Gold

1. The assessment of whether lifetime expected credit losses should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition (irrespective of whether a financial instrument has been repriced to reflect an increase in credit risk) instead of on evidence of a financial asset being credit-impaired at the reporting date or an actual default occurring. Generally, there will be a significant increase in credit risk before a financial asset becomes credit-impaired or an actual default occurs.
2. In the reporting period that includes the date of initial application of these amendments, an entity is not required to present the quantitative information required by paragraph 28(f) of IAS 8.
3. Interest Rate Benchmark Reform, which amended IFRS 9, IAS 39 and IFRS 7, issued in September 2019, added Section 6.8 and amended paragraph 7.2.26. An entity shall apply these amendments for annual periods beginning on or after 1 January 2020. Earlier application is permitted. If an entity applies these amendments for an earlier period, it shall disclose that fact.
4. An entity shall assess separately whether each subgroup meets the requirements in paragraph 6.6.1 to be an eligible hedged item. If any subgroup fails to meet the requirements in paragraph 6.6.1, the entity shall discontinue hedge accounting prospectively for the hedging relationship in its entirety. An entity also shall apply the requirements in paragraphs 6.5.8 and 6.5.11 to account for ineffectiveness related to the hedging relationship in its entirety.

*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

Royal Gold assigned short-term B2 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Emotional Trigger/Responses Analysis) with Wilcoxon Sign-Rank Test^1,2,3,4 and conclude that the RGLD 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 RGLD stock.

Financial State Forecast for RGLD Royal Gold Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	B2	Ba3
Operational Risk	55	72
Market Risk	35	49
Technical Analysis	36	85
Fundamental Analysis	77	54
Risk Unsystematic	59	46

Prediction Confidence Score

Trust metric by Neural Network: 75 out of 100 with 649 signals.

References

1. Jacobs B, Donkers B, Fok D. 2014. Product Recommendations Based on Latent Purchase Motivations. Rotterdam, Neth.: ERIM
2. R. Rockafellar and S. Uryasev. Optimization of conditional value-at-risk. Journal of Risk, 2:21–42, 2000.
3. Kitagawa T, Tetenov A. 2015. Who should be treated? Empirical welfare maximization methods for treatment choice. Tech. Rep., Cent. Microdata Methods Pract., Inst. Fiscal Stud., London
4. J. Hu and M. P. Wellman. Nash q-learning for general-sum stochastic games. Journal of Machine Learning Research, 4:1039–1069, 2003.
5. E. Altman, K. Avrachenkov, and R. N ́u ̃nez-Queija. Perturbation analysis for denumerable Markov chains with application to queueing models. Advances in Applied Probability, pages 839–853, 2004
6. Athey S. 2019. The impact of machine learning on economics. In The Economics of Artificial Intelligence: An Agenda, ed. AK Agrawal, J Gans, A Goldfarb. Chicago: Univ. Chicago Press. In press
7. Mnih A, Teh YW. 2012. A fast and simple algorithm for training neural probabilistic language models. In Proceedings of the 29th International Conference on Machine Learning, pp. 419–26. La Jolla, CA: Int. Mach. Learn. Soc.

Frequently Asked Questions

Q: What is the prediction methodology for RGLD stock?
A: RGLD stock prediction methodology: We evaluate the prediction models Modular Neural Network (Emotional Trigger/Responses Analysis) and Wilcoxon Sign-Rank Test
Q: Is RGLD stock a buy or sell?
A: The dominant strategy among neural network is to Sell RGLD Stock.
Q: Is Royal Gold stock a good investment?
A: The consensus rating for Royal Gold is Sell and assigned short-term B2 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of RGLD stock?
A: The consensus rating for RGLD is Sell.
Q: What is the prediction period for RGLD stock?
A: The prediction period for RGLD is (n+3 month)

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