SAP Research Report

Summary

The classical linear multi-factor stock selection model is widely used for long-term stock price trend prediction. However, the stock market is chaotic, complex, and dynamic, for which reasons the linear model assumption may be unreasonable, and it is more meaningful to construct a better-integrated stock selection model based on different feature selection and nonlinear stock price trend prediction methods. We evaluate SAP prediction models with Reinforcement Machine Learning (ML) and ElasticNet Regression1,2,3,4 and conclude that the SAP.DE 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 Hold SAP.DE stock.

Key Points

1. Should I buy stocks now or wait amid such uncertainty?
2. Which neural network is best for prediction?
3. Is it better to buy and sell or hold?

SAP.DE Target Price Prediction Modeling Methodology

We consider SAP Stock Decision Process with Reinforcement Machine Learning (ML) where A is the set of discrete actions of SAP.DE 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(ElasticNet Regression)5,6,7= $\begin{array}{cccc}{p}_{a1}& {p}_{a2}& \dots & {p}_{1n}\\ & ⋮\\ {p}_{j1}& {p}_{j2}& \dots & {p}_{jn}\\ & ⋮\\ {p}_{k1}& {p}_{k2}& \dots & {p}_{kn}\\ & ⋮\\ {p}_{n1}& {p}_{n2}& \dots & {p}_{nn}\end{array}$ X R(Reinforcement Machine Learning (ML)) X S(n):→ (n+16 weeks) $∑ i = 1 n a i$

n:Time series to forecast

p:Price signals of SAP.DE 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?

SAP.DE Stock Forecast (Buy or Sell) for (n+16 weeks)

Sample Set: Neural Network
Stock/Index: SAP.DE SAP
Time series to forecast n: 20 Nov 2022 for (n+16 weeks)

According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Hold SAP.DE 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 SAP

1. A regular way purchase or sale gives rise to a fixed price commitment between trade date and settlement date that meets the definition of a derivative. However, because of the short duration of the commitment it is not recognised as a derivative financial instrument. Instead, this Standard provides for special accounting for such regular way contracts (see paragraphs 3.1.2 and B3.1.3–B3.1.6).
2. The rebuttable presumption in paragraph 5.5.11 is not an absolute indicator that lifetime expected credit losses should be recognised, but is presumed to be the latest point at which lifetime expected credit losses should be recognised even when using forward-looking information (including macroeconomic factors on a portfolio level).
3. For a financial guarantee contract, the entity is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed. Accordingly, cash shortfalls are the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the entity expects to receive from the holder, the debtor or any other party. If the asset is fully guaranteed, the estimation of cash shortfalls for a financial guarantee contract would be consistent with the estimations of cash shortfalls for the asset subject to the guarantee
4. An alternative benchmark rate designated as a non-contractually specified risk component that is not separately identifiable (see paragraphs 6.3.7(a) and B6.3.8) at the date it is designated shall be deemed to have met that requirement at that date, if, and only if, the entity reasonably expects the alternative benchmark rate will be separately identifiable within 24 months. The 24-month period applies to each alternative benchmark rate separately and starts from the date the entity designates the alternative benchmark rate as a non-contractually specified risk component for the first time (ie the 24- month period applies on a rate-by-rate basis).

*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

SAP assigned short-term Ba1 & long-term B1 forecasted stock rating. We evaluate the prediction models Reinforcement Machine Learning (ML) with ElasticNet Regression1,2,3,4 and conclude that the SAP.DE 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 Hold SAP.DE stock.

Financial State Forecast for SAP.DE SAP Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba1B1
Operational Risk 8038
Market Risk7281
Technical Analysis8467
Fundamental Analysis5544
Risk Unsystematic6057

Prediction Confidence Score

Trust metric by Neural Network: 81 out of 100 with 792 signals.

References

1. Scott SL. 2010. A modern Bayesian look at the multi-armed bandit. Appl. Stoch. Models Bus. Ind. 26:639–58
2. Y. Chow and M. Ghavamzadeh. Algorithms for CVaR optimization in MDPs. In Advances in Neural Infor- mation Processing Systems, pages 3509–3517, 2014.
3. A. Eck, L. Soh, S. Devlin, and D. Kudenko. Potential-based reward shaping for finite horizon online POMDP planning. Autonomous Agents and Multi-Agent Systems, 30(3):403–445, 2016
4. Morris CN. 1983. Parametric empirical Bayes inference: theory and applications. J. Am. Stat. Assoc. 78:47–55
5. Hornik K, Stinchcombe M, White H. 1989. Multilayer feedforward networks are universal approximators. Neural Netw. 2:359–66
6. C. Wu and Y. Lin. Minimizing risk models in Markov decision processes with policies depending on target values. Journal of Mathematical Analysis and Applications, 231(1):47–67, 1999
7. Bai J, Ng S. 2017. Principal components and regularized estimation of factor models. arXiv:1708.08137 [stat.ME]
Frequently Asked QuestionsQ: What is the prediction methodology for SAP.DE stock?
A: SAP.DE stock prediction methodology: We evaluate the prediction models Reinforcement Machine Learning (ML) and ElasticNet Regression
Q: Is SAP.DE stock a buy or sell?
A: The dominant strategy among neural network is to Hold SAP.DE Stock.
Q: Is SAP stock a good investment?
A: The consensus rating for SAP is Hold and assigned short-term Ba1 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of SAP.DE stock?
A: The consensus rating for SAP.DE is Hold.
Q: What is the prediction period for SAP.DE stock?
A: The prediction period for SAP.DE is (n+16 weeks)