Modelling A.I. in Economics

Is MELI Stock Buy or Sell? (Stock Forecast) (Forecast)

Prediction of the Stock Market is a challenging task in predicting the stock prices in the future. Due to the fluctuating nature of the stock, the stock market is too difficult to predict. Stock prices are constantly changing every day. Estimating of the stock market has a high demand for stock customers. Applying all extracted rules at any time is a major challenge to estimate the future stock price with high accuracy. The latest prediction techniques adopted for the stock market such as Artificial Neural Network, Neuro-Fuzzy System, Time Series Linear Models (TSLM), Recurrent Neural Network (RNN). We evaluate MercadoLibre prediction models with Supervised Machine Learning (ML) and Logistic Regression1,2,3,4 and conclude that the MELI 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 Sell MELI stock.


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

Key Points

  1. Prediction Modeling
  2. Trading Interaction
  3. Can statistics predict the future?

MELI Target Price Prediction Modeling Methodology

In this paper, we introduce a new prediction model depend on Bidirectional Gated Recurrent Unit (BGRU). Our predictive model relies on both online financial news and historical stock prices data to predict the stock movements in the future. We consider MercadoLibre Stock Decision Process with Logistic Regression where A is the set of discrete actions of MELI 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(Supervised Machine Learning (ML)) X S(n):→ (n+6 month) e x rx

n:Time series to forecast

p:Price signals of MELI 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?

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


Sample Set: Neural Network
Stock/Index: MELI MercadoLibre
Time series to forecast n: 03 Nov 2022 for (n+6 month)

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

  1. The expected credit losses on a loan commitment shall be discounted using the effective interest rate, or an approximation thereof, that will be applied when recognising the financial asset resulting from the loan commitment. This is because for the purpose of applying the impairment requirements, a financial asset that is recognised following a draw down on a loan commitment shall be treated as a continuation of that commitment instead of as a new financial instrument. The expected credit losses on the financial asset shall therefore be measured considering the initial credit risk of the loan commitment from the date that the entity became a party to the irrevocable commitment.
  2. An entity is not required to restate prior periods to reflect the application of these amendments. The entity may restate prior periods if, and only if, it is possible without the use of hindsight. If an entity does not restate prior periods, the entity shall recognise any difference between the previous carrying amount and the carrying amount at the beginning of the annual reporting period that includes the date of initial application of these amendments in the opening retained earnings (or other component of equity, as appropriate) of the annual reporting period that includes the date of initial application of these amendments.
  3. To the extent that a transfer of a financial asset does not qualify for derecognition, the transferor's contractual rights or obligations related to the transfer are not accounted for separately as derivatives if recognising both the derivative and either the transferred asset or the liability arising from the transfer would result in recognising the same rights or obligations twice. For example, a call option retained by the transferor may prevent a transfer of financial assets from being accounted for as a sale. In that case, the call option is not separately recognised as a derivative asset.
  4. Paragraph 6.3.4 permits an entity to designate as hedged items aggregated exposures that are a combination of an exposure and a derivative. When designating such a hedged item, an entity assesses whether the aggregated exposure combines an exposure with a derivative so that it creates a different aggregated exposure that is managed as one exposure for a particular risk (or risks). In that case, the entity may designate the hedged item on the basis of the aggregated exposure

*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

MercadoLibre assigned short-term B2 & long-term Baa2 forecasted stock rating. We evaluate the prediction models Supervised Machine Learning (ML) with Logistic Regression1,2,3,4 and conclude that the MELI 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 Sell MELI stock.

Financial State Forecast for MELI MercadoLibre Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B2Baa2
Operational Risk 3382
Market Risk4790
Technical Analysis3990
Fundamental Analysis8246
Risk Unsystematic8690

Prediction Confidence Score

Trust metric by Neural Network: 76 out of 100 with 681 signals.

References

  1. Canova, F. B. E. Hansen (1995), "Are seasonal patterns constant over time? A test for seasonal stability," Journal of Business and Economic Statistics, 13, 237–252.
  2. Breiman L. 1996. Bagging predictors. Mach. Learn. 24:123–40
  3. V. Borkar. A sensitivity formula for the risk-sensitive cost and the actor-critic algorithm. Systems & Control Letters, 44:339–346, 2001
  4. A. Tamar, D. Di Castro, and S. Mannor. Policy gradients with variance related risk criteria. In Proceedings of the Twenty-Ninth International Conference on Machine Learning, pages 387–396, 2012.
  5. Wu X, Kumar V, Quinlan JR, Ghosh J, Yang Q, et al. 2008. Top 10 algorithms in data mining. Knowl. Inform. Syst. 14:1–37
  6. Holland PW. 1986. Statistics and causal inference. J. Am. Stat. Assoc. 81:945–60
  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 MELI stock?
A: MELI stock prediction methodology: We evaluate the prediction models Supervised Machine Learning (ML) and Logistic Regression
Q: Is MELI stock a buy or sell?
A: The dominant strategy among neural network is to Sell MELI Stock.
Q: Is MercadoLibre stock a good investment?
A: The consensus rating for MercadoLibre is Sell and assigned short-term B2 & long-term Baa2 forecasted stock rating.
Q: What is the consensus rating of MELI stock?
A: The consensus rating for MELI is Sell.
Q: What is the prediction period for MELI stock?
A: The prediction period for MELI is (n+6 month)

Premium

  • Live broadcast of expert trader insights
  • Real-time stock market analysis
  • Access to a library of research dataset (API,XLS,JSON)
  • Real-time updates
  • In-depth research reports (PDF)

Login
This project is licensed under the license; additional terms may apply.