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

Stock market is a promising financial investment that can generate great wealth. However, the volatile nature of the stock market makes it a very high risk investment. Thus, a lot of researchers have contributed their efforts to forecast the stock market pricing and average movement. Researchers have used various methods in computer science and economics in their quests to gain a piece of this volatile information and make great fortune out of the stock market investment. This paper investigates various techniques for the stock market prediction using artificial neural network (ANN). We evaluate DraftKings prediction models with Transductive Learning (ML) and Logistic Regression1,2,3,4 and conclude that the DKNG 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 Hold DKNG stock.


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

Key Points

  1. Dominated Move
  2. Market Signals
  3. What is a prediction confidence?

DKNG Target Price Prediction Modeling Methodology

The stock market is an interesting industry to study. There are various variations present in it. Many experts have been studying and researching on the various trends that the stock market goes through. One of the major studies has been the attempt to predict the stock prices of various companies based on historical data. Prediction of stock prices will greatly help people to understand where and how to invest so that the risk of losing money is minimized. We consider DraftKings Stock Decision Process with Logistic Regression where A is the set of discrete actions of DKNG 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(Transductive Learning (ML)) X S(n):→ (n+3 month) e x rx

n:Time series to forecast

p:Price signals of DKNG 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?

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


Sample Set: Neural Network
Stock/Index: DKNG DraftKings
Time series to forecast n: 13 Nov 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Hold DKNG 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 DraftKings

  1. If a guarantee provided by an entity to pay for default losses on a transferred asset prevents the transferred asset from being derecognised to the extent of the continuing involvement, the transferred asset at the date of the transfer is measured at the lower of (i) the carrying amount of the asset and (ii) the maximum amount of the consideration received in the transfer that the entity could be required to repay ('the guarantee amount'). The associated liability is initially measured at the guarantee amount plus the fair value of the guarantee (which is normally the consideration received for the guarantee). Subsequently, the initial fair value of the guarantee is recognised in profit or loss when (or as) the obligation is satisfied (in accordance with the principles of IFRS 15) and the carrying value of the asset is reduced by any loss allowance.
  2. Hedge effectiveness is the extent to which changes in the fair value or the cash flows of the hedging instrument offset changes in the fair value or the cash flows of the hedged item (for example, when the hedged item is a risk component, the relevant change in fair value or cash flows of an item is the one that is attributable to the hedged risk). Hedge ineffectiveness is the extent to which the changes in the fair value or the cash flows of the hedging instrument are greater or less than those on the hedged item.
  3. Paragraph 6.3.6 states that in consolidated financial statements the foreign currency risk of a highly probable forecast intragroup transaction may qualify as a hedged item in a cash flow hedge, provided that the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction and that the foreign currency risk will affect consolidated profit or loss. For this purpose an entity can be a parent, subsidiary, associate, joint arrangement or branch. If the foreign currency risk of a forecast intragroup transaction does not affect consolidated profit or loss, the intragroup transaction cannot qualify as a hedged item. This is usually the case for royalty payments, interest payments or management charges between members of the same group, unless there is a related external transaction. However, when the foreign currency risk of a forecast intragroup transaction will affect consolidated profit or loss, the intragroup transaction can qualify as a hedged item. An example is forecast sales or purchases of inventories between members of the same group if there is an onward sale of the inventory to a party external to the group. Similarly, a forecast intragroup sale of plant and equipment from the group entity that manufactured it to a group entity that will use the plant and equipment in its operations may affect consolidated profit or loss. This could occur, for example, because the plant and equipment will be depreciated by the purchasing entity and the amount initially recognised for the plant and equipment may change if the forecast intragroup transaction is denominated in a currency other than the functional currency of the purchasing entity.
  4. For example, Entity A, whose functional currency is its local currency, has a firm commitment to pay FC150,000 for advertising expenses in nine months' time and a firm commitment to sell finished goods for FC150,000 in 15 months' time. Entity A enters into a foreign currency derivative that settles in nine months' time under which it receives FC100 and pays CU70. Entity A has no other exposures to FC. Entity A does not manage foreign currency risk on a net basis. Hence, Entity A cannot apply hedge accounting for a hedging relationship between the foreign currency derivative and a net position of FC100 (consisting of FC150,000 of the firm purchase commitment—ie advertising services—and FC149,900 (of the FC150,000) of the firm sale commitment) for a nine-month period.

*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

DraftKings assigned short-term B1 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Transductive Learning (ML) with Logistic Regression1,2,3,4 and conclude that the DKNG 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 Hold DKNG stock.

Financial State Forecast for DKNG DraftKings Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B1Ba3
Operational Risk 5466
Market Risk5444
Technical Analysis4186
Fundamental Analysis6853
Risk Unsystematic7757

Prediction Confidence Score

Trust metric by Neural Network: 85 out of 100 with 844 signals.

References

  1. Efron B, Hastie T, Johnstone I, Tibshirani R. 2004. Least angle regression. Ann. Stat. 32:407–99
  2. Efron B, Hastie T. 2016. Computer Age Statistical Inference, Vol. 5. Cambridge, UK: Cambridge Univ. Press
  3. Athey S, Imbens G. 2016. Recursive partitioning for heterogeneous causal effects. PNAS 113:7353–60
  4. E. Collins. Using Markov decision processes to optimize a nonlinear functional of the final distribution, with manufacturing applications. In Stochastic Modelling in Innovative Manufacturing, pages 30–45. Springer, 1997
  5. Bessler, D. A. T. Covey (1991), "Cointegration: Some results on U.S. cattle prices," Journal of Futures Markets, 11, 461–474.
  6. C. Claus and C. Boutilier. The dynamics of reinforcement learning in cooperative multiagent systems. In Proceedings of the Fifteenth National Conference on Artificial Intelligence and Tenth Innovative Applications of Artificial Intelligence Conference, AAAI 98, IAAI 98, July 26-30, 1998, Madison, Wisconsin, USA., pages 746–752, 1998.
  7. M. J. Hausknecht. Cooperation and Communication in Multiagent Deep Reinforcement Learning. PhD thesis, The University of Texas at Austin, 2016
Frequently Asked QuestionsQ: What is the prediction methodology for DKNG stock?
A: DKNG stock prediction methodology: We evaluate the prediction models Transductive Learning (ML) and Logistic Regression
Q: Is DKNG stock a buy or sell?
A: The dominant strategy among neural network is to Hold DKNG Stock.
Q: Is DraftKings stock a good investment?
A: The consensus rating for DraftKings is Hold and assigned short-term B1 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of DKNG stock?
A: The consensus rating for DKNG is Hold.
Q: What is the prediction period for DKNG stock?
A: The prediction period for DKNG is (n+3 month)

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