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

With the advent of machine learning, numerous approaches have been proposed to forecast stock prices. Various models have been developed to date such as Recurrent Neural Networks, Long Short-Term Memory, Convolutional Neural Network sliding window, etc., but were not accurate enough. Here, the aim is to predict the price of a stock and compare the results obtained using three major algorithms namely Kalman filters, XGBoost and ARIMA. We evaluate ADM prediction models with Inductive Learning (ML) and Polynomial Regression^1,2,3,4 and conclude that the ADM stock is predictable in the short/long term. According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold ADM stock.

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

Key Points

1. What is a prediction confidence?
2. Can machine learning predict?
3. How can neural networks improve predictions?

ADM Target Price Prediction Modeling Methodology

As stock data is characterized by highly noisy and non-stationary, stock price prediction is regarded as a knotty problem. In this paper, we propose new two-stage ensemble models by combining empirical mode decomposition (EMD) (or variational mode decomposition (VMD)), extreme learning machine (ELM) and improved harmony search (IHS) algorithm for stock price prediction, which are respectively named EMD–ELM–IHS and VMD–ELM–IHS. We consider ADM Stock Decision Process with Polynomial Regression where A is the set of discrete actions of ADM 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(Polynomial Regression)^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(Inductive Learning (ML)) X S(n):→ (n+6 month) $\begin{array}{l}\int r^s\mathrm{rs}\end{array}$

n:Time series to forecast

p:Price signals of ADM 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?

ADM Stock Forecast (Buy or Sell) for (n+6 month)

Sample Set: Neural Network
Stock/Index: ADM ADM
Time series to forecast n: 09 Nov 2022 for (n+6 month)

According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold ADM 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 ADM

1. When rebalancing a hedging relationship, an entity shall update its analysis of the sources of hedge ineffectiveness that are expected to affect the hedging relationship during its (remaining) term (see paragraph B6.4.2). The documentation of the hedging relationship shall be updated accordingly.
2. As noted in paragraph B4.3.1, when an entity becomes a party to a hybrid contract with a host that is not an asset within the scope of this Standard and with one or more embedded derivatives, paragraph 4.3.3 requires the entity to identify any such embedded derivative, assess whether it is required to be separated from the host contract and, for those that are required to be separated, measure the derivatives at fair value at initial recognition and subsequently. These requirements can be more complex, or result in less reliable measures, than measuring the entire instrument at fair value through profit or loss. For that reason this Standard permits the entire hybrid contract to be designated as at fair value through profit or loss.
3. For loan commitments, an entity considers changes in the risk of a default occurring on the loan to which a loan commitment relates. For financial guarantee contracts, an entity considers the changes in the risk that the specified debtor will default on the contract.
4. When determining whether the recognition of lifetime expected credit losses is required, an entity shall consider reasonable and supportable information that is available without undue cost or effort and that may affect the credit risk on a financial instrument in accordance with paragraph 5.5.17(c). An entity need not undertake an exhaustive search for information when determining whether credit risk has increased significantly since initial recognition.

*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

ADM assigned short-term Ba3 & long-term Ba1 forecasted stock rating. We evaluate the prediction models Inductive Learning (ML) with Polynomial Regression^1,2,3,4 and conclude that the ADM stock is predictable in the short/long term. According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold ADM stock.

Financial State Forecast for ADM ADM Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	Ba3	Ba1
Operational Risk	79	79
Market Risk	67	71
Technical Analysis	56	76
Fundamental Analysis	88	82
Risk Unsystematic	31	41

Prediction Confidence Score

Trust metric by Neural Network: 81 out of 100 with 828 signals.

References

1. Friedman JH. 2002. Stochastic gradient boosting. Comput. Stat. Data Anal. 38:367–78
2. M. J. Hausknecht. Cooperation and Communication in Multiagent Deep Reinforcement Learning. PhD thesis, The University of Texas at Austin, 2016
3. J. Baxter and P. Bartlett. Infinite-horizon policy-gradient estimation. Journal of Artificial Intelligence Re- search, 15:319–350, 2001.
4. Miller A. 2002. Subset Selection in Regression. New York: CRC Press
5. P. Artzner, F. Delbaen, J. Eber, and D. Heath. Coherent measures of risk. Journal of Mathematical Finance, 9(3):203–228, 1999
6. Semenova V, Goldman M, Chernozhukov V, Taddy M. 2018. Orthogonal ML for demand estimation: high dimensional causal inference in dynamic panels. arXiv:1712.09988 [stat.ML]
7. J. Z. Leibo, V. Zambaldi, M. Lanctot, J. Marecki, and T. Graepel. Multi-agent Reinforcement Learning in Sequential Social Dilemmas. In Proceedings of the 16th International Conference on Autonomous Agents and Multiagent Systems (AAMAS 2017), Sao Paulo, Brazil, 2017

Frequently Asked Questions

Q: What is the prediction methodology for ADM stock?
A: ADM stock prediction methodology: We evaluate the prediction models Inductive Learning (ML) and Polynomial Regression
Q: Is ADM stock a buy or sell?
A: The dominant strategy among neural network is to Hold ADM Stock.
Q: Is ADM stock a good investment?
A: The consensus rating for ADM is Hold and assigned short-term Ba3 & long-term Ba1 forecasted stock rating.
Q: What is the consensus rating of ADM stock?
A: The consensus rating for ADM is Hold.
Q: What is the prediction period for ADM stock?
A: The prediction period for ADM is (n+6 month)

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