How do you decide buy or sell a stock? (MRO Stock Forecast)

The research reported in the paper focuses on the stock market prediction problem, the main aim being the development of a methodology to forecast the stock closing price. The methodology is based on some novel variable selection methods and an analysis of neural network and support vector machines based prediction models. Also, a hybrid approach which combines the use of the variables derived from technical and fundamental analysis of stock market indicators in order to improve prediction results of the proposed approaches is reported in this paper. We evaluate Marathon Oil prediction models with Transductive Learning (ML) and Factor1,2,3,4 and conclude that the MRO stock is predictable in the short/long term. According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold MRO stock.


Keywords: MRO, Marathon Oil, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. Nash Equilibria
  2. What is neural prediction?
  3. What are buy sell or hold recommendations?

MRO Target Price Prediction Modeling Methodology

One decision in Stock Market can make huge impact on an investor's life. The stock market is a complex system and often covered in mystery, it is therefore, very difficult to analyze all the impacting factors before making a decision. In this research, we have tried to design a stock market prediction model which is based on different factors. We consider Marathon Oil Stock Decision Process with Factor where A is the set of discrete actions of MRO 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(Factor)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(Transductive Learning (ML)) X S(n):→ (n+1 year) R = 1 0 0 0 1 0 0 0 1

n:Time series to forecast

p:Price signals of MRO 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?

MRO Stock Forecast (Buy or Sell) for (n+1 year)

Sample Set: Neural Network
Stock/Index: MRO Marathon Oil
Time series to forecast n: 16 Nov 2022 for (n+1 year)

According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold MRO 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 Marathon Oil

  1. If, at the date of initial application, it is impracticable (as defined in IAS 8) for an entity to assess a modified time value of money element in accordance with paragraphs B4.1.9B–B4.1.9D on the basis of the facts and circumstances that existed at the initial recognition of the financial asset, an entity shall assess the contractual cash flow characteristics of that financial asset on the basis of the facts and circumstances that existed at the initial recognition of the financial asset without taking into account the requirements related to the modification of the time value of money element in paragraphs B4.1.9B–B4.1.9D. (See also paragraph 42R of IFRS 7.)
  2. If the underlyings are not the same but are economically related, there can be situations in which the values of the hedging instrument and the hedged item move in the same direction, for example, because the price differential between the two related underlyings changes while the underlyings themselves do not move significantly. That is still consistent with an economic relationship between the hedging instrument and the hedged item if the values of the hedging instrument and the hedged item are still expected to typically move in the opposite direction when the underlyings move.
  3. The accounting for the forward element of forward contracts in accordance with paragraph 6.5.16 applies only to the extent that the forward element relates to the hedged item (aligned forward element). The forward element of a forward contract relates to the hedged item if the critical terms of the forward contract (such as the nominal amount, life and underlying) are aligned with the hedged item. Hence, if the critical terms of the forward contract and the hedged item are not fully aligned, an entity shall determine the aligned forward element, ie how much of the forward element included in the forward contract (actual forward element) relates to the hedged item (and therefore should be treated in accordance with paragraph 6.5.16). An entity determines the aligned forward element using the valuation of the forward contract that would have critical terms that perfectly match the hedged item.
  4. To calculate the change in the value of the hedged item for the purpose of measuring hedge ineffectiveness, an entity may use a derivative that would have terms that match the critical terms of the hedged item (this is commonly referred to as a 'hypothetical derivative'), and, for example for a hedge of a forecast transaction, would be calibrated using the hedged price (or rate) level. For example, if the hedge was for a two-sided risk at the current market level, the hypothetical derivative would represent a hypothetical forward contract that is calibrated to a value of nil at the time of designation of the hedging relationship. If the hedge was for example for a one-sided risk, the hypothetical derivative would represent the intrinsic value of a hypothetical option that at the time of designation of the hedging relationship is at the money if the hedged price level is the current market level, or out of the money if the hedged price level is above (or, for a hedge of a long position, below) the current market level. Using a hypothetical derivative is one possible way of calculating the change in the value of the hedged item. The hypothetical derivative replicates the hedged item and hence results in the same outcome as if that change in value was determined by a different approach. Hence, using a 'hypothetical derivative' is not a method in its own right but a mathematical expedient that can only be used to calculate the value of the hedged item. Consequently, a 'hypothetical derivative' cannot be used to include features in the value of the hedged item that only exist in the hedging instrument (but not in the hedged item). An example is debt denominated in a foreign currency (irrespective of whether it is fixed-rate or variable-rate debt). When using a hypothetical derivative to calculate the change in the value of such debt or the present value of the cumulative change in its cash flows, the hypothetical derivative cannot simply impute a charge for exchanging different currencies even though actual derivatives under which different currencies are exchanged might include such a charge (for example, cross-currency interest rate swaps).

*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

Marathon Oil assigned short-term Baa2 & long-term Baa2 forecasted stock rating. We evaluate the prediction models Transductive Learning (ML) with Factor1,2,3,4 and conclude that the MRO stock is predictable in the short/long term. According to price forecasts for (n+1 year) period: The dominant strategy among neural network is to Hold MRO stock.

Financial State Forecast for MRO Marathon Oil Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Baa2Baa2
Operational Risk 6684
Market Risk7768
Technical Analysis7487
Fundamental Analysis6586
Risk Unsystematic8780

Prediction Confidence Score

Trust metric by Neural Network: 72 out of 100 with 715 signals.

References

  1. Y. Chow and M. Ghavamzadeh. Algorithms for CVaR optimization in MDPs. In Advances in Neural Infor- mation Processing Systems, pages 3509–3517, 2014.
  2. R. Howard and J. Matheson. Risk sensitive Markov decision processes. Management Science, 18(7):356– 369, 1972
  3. Mikolov T, Yih W, Zweig G. 2013c. Linguistic regularities in continuous space word representations. In Pro- ceedings of the 2013 Conference of the North American Chapter of the Association for Computational Linguistics: Human Language Technologies, pp. 746–51. New York: Assoc. Comput. Linguist.
  4. Barrett, C. B. (1997), "Heteroscedastic price forecasting for food security management in developing countries," Oxford Development Studies, 25, 225–236.
  5. G. Theocharous and A. Hallak. Lifetime value marketing using reinforcement learning. RLDM 2013, page 19, 2013
  6. Andrews, D. W. K. (1993), "Tests for parameter instability and structural change with unknown change point," Econometrica, 61, 821–856.
  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 QuestionsQ: What is the prediction methodology for MRO stock?
A: MRO stock prediction methodology: We evaluate the prediction models Transductive Learning (ML) and Factor
Q: Is MRO stock a buy or sell?
A: The dominant strategy among neural network is to Hold MRO Stock.
Q: Is Marathon Oil stock a good investment?
A: The consensus rating for Marathon Oil is Hold and assigned short-term Baa2 & long-term Baa2 forecasted stock rating.
Q: What is the consensus rating of MRO stock?
A: The consensus rating for MRO is Hold.
Q: What is the prediction period for MRO stock?
A: The prediction period for MRO is (n+1 year)

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