Modelling A.I. in Economics

How Is Machine Learning Used in Trading? (APD Stock Forecast)

As part of this research, different techniques have been studied for data extraction and analysis. After having reviewed the work related to the initial idea of the research, it is shown the development carried out, together with the data extraction and the machine learning algorithms for prediction used. The calculation of technical analysis metrics is also included. The development of a visualization platform has been proposed for high-level interaction between the user and the recommendation system. We evaluate Air Products and Chemicals prediction models with Modular Neural Network (Emotional Trigger/Responses Analysis) and Wilcoxon Rank-Sum Test1,2,3,4 and conclude that the APD stock is predictable in the short/long term. According to price forecasts for (n+4 weeks) period: The dominant strategy among neural network is to Hold APD stock.


Keywords: APD, Air Products and Chemicals, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. What are the most successful trading algorithms?
  2. Why do we need predictive models?
  3. Should I buy stocks now or wait amid such uncertainty?

APD Target Price Prediction Modeling Methodology

Stock market is basically nonlinear in nature and the research on stock market is one of the most important issues in recent years. People invest in stock market based on some prediction. For predict, the stock market prices people search such methods and tools which will increase their profits, while minimize their risks. Prediction plays a very important role in stock market business which is very complicated and challenging process. We consider Air Products and Chemicals Stock Decision Process with Wilcoxon Rank-Sum Test where A is the set of discrete actions of APD 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 Rank-Sum Test)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 (Emotional Trigger/Responses Analysis)) X S(n):→ (n+4 weeks) i = 1 n s i

n:Time series to forecast

p:Price signals of APD 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?

APD Stock Forecast (Buy or Sell) for (n+4 weeks)


Sample Set: Neural Network
Stock/Index: APD Air Products and Chemicals
Time series to forecast n: 09 Nov 2022 for (n+4 weeks)

According to price forecasts for (n+4 weeks) period: The dominant strategy among neural network is to Hold APD 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 Air Products and Chemicals

  1. Historical information is an important anchor or base from which to measure expected credit losses. However, an entity shall adjust historical data, such as credit loss experience, on the basis of current observable data to reflect the effects of the current conditions and its forecasts of future conditions that did not affect the period on which the historical data is based, and to remove the effects of the conditions in the historical period that are not relevant to the future contractual cash flows. In some cases, the best reasonable and supportable information could be the unadjusted historical information, depending on the nature of the historical information and when it was calculated, compared to circumstances at the reporting date and the characteristics of the financial instrument being considered. Estimates of changes in expected credit losses should reflect, and be directionally consistent with, changes in related observable data from period to period
  2. Adjusting the hedge ratio allows an entity to respond to changes in the relationship between the hedging instrument and the hedged item that arise from their underlyings or risk variables. For example, a hedging relationship in which the hedging instrument and the hedged item have different but related underlyings changes in response to a change in the relationship between those two underlyings (for example, different but related reference indices, rates or prices). Hence, rebalancing allows the continuation of a hedging relationship in situations in which the relationship between the hedging instrument and the hedged item chang
  3. When defining default for the purposes of determining the risk of a default occurring, an entity shall apply a default definition that is consistent with the definition used for internal credit risk management purposes for the relevant financial instrument and consider qualitative indicators (for example, financial covenants) when appropriate. However, there is a rebuttable presumption that default does not occur later than when a financial asset is 90 days past due unless an entity has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The definition of default used for these purposes shall be applied consistently to all financial instruments unless information becomes available that demonstrates that another default definition is more appropriate for a particular financial instrument.
  4. Paragraph 4.1.1(b) requires an entity to classify a financial asset on the basis of its contractual cash flow characteristics if the financial asset is held within a business model whose objective is to hold assets to collect contractual cash flows or within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, unless paragraph 4.1.5 applies. To do so, the condition in paragraphs 4.1.2(b) and 4.1.2A(b) requires an entity to determine whether the asset's contractual cash flows are solely payments of principal and interest on the principal amount outstanding.

*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

Air Products and Chemicals assigned short-term Ba3 & long-term B3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Emotional Trigger/Responses Analysis) with Wilcoxon Rank-Sum Test1,2,3,4 and conclude that the APD stock is predictable in the short/long term. According to price forecasts for (n+4 weeks) period: The dominant strategy among neural network is to Hold APD stock.

Financial State Forecast for APD Air Products and Chemicals Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba3B3
Operational Risk 4537
Market Risk7156
Technical Analysis6731
Fundamental Analysis6363
Risk Unsystematic8145

Prediction Confidence Score

Trust metric by Neural Network: 80 out of 100 with 748 signals.

References

  1. Bottou L. 2012. Stochastic gradient descent tricks. In Neural Networks: Tricks of the Trade, ed. G Montavon, G Orr, K-R Müller, pp. 421–36. Berlin: Springer
  2. Lai TL, Robbins H. 1985. Asymptotically efficient adaptive allocation rules. Adv. Appl. Math. 6:4–22
  3. Athey S, Blei D, Donnelly R, Ruiz F. 2017b. Counterfactual inference for consumer choice across many prod- uct categories. AEA Pap. Proc. 108:64–67
  4. M. Puterman. Markov Decision Processes: Discrete Stochastic Dynamic Programming. Wiley, New York, 1994.
  5. Dimakopoulou M, Athey S, Imbens G. 2017. Estimation considerations in contextual bandits. arXiv:1711.07077 [stat.ML]
  6. V. Konda and J. Tsitsiklis. Actor-Critic algorithms. In Proceedings of Advances in Neural Information Processing Systems 12, pages 1008–1014, 2000
  7. 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
Frequently Asked QuestionsQ: What is the prediction methodology for APD stock?
A: APD stock prediction methodology: We evaluate the prediction models Modular Neural Network (Emotional Trigger/Responses Analysis) and Wilcoxon Rank-Sum Test
Q: Is APD stock a buy or sell?
A: The dominant strategy among neural network is to Hold APD Stock.
Q: Is Air Products and Chemicals stock a good investment?
A: The consensus rating for Air Products and Chemicals is Hold and assigned short-term Ba3 & long-term B3 forecasted stock rating.
Q: What is the consensus rating of APD stock?
A: The consensus rating for APD is Hold.
Q: What is the prediction period for APD stock?
A: The prediction period for APD is (n+4 weeks)

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