Is now good time to invest? (CHH Stock Forecast)

Choice Hotels Research Report

Summary

In this paper, we propose a hybrid machine learning system based on Genetic Algor ithm (GA) and Support Vector Machines (SVM) for stock market prediction. A variety of indicators from the technical analysis field of study are used as input features. We also make use of the correlation between stock prices of different companies to forecast the price of a stock, making use of technical indicators of highly correlated stocks, not only the stock to be predicted. The genetic algorithm is used to select the set of most informative input features from among all the technical indicators. We evaluate Choice Hotels prediction models with Modular Neural Network (Social Media Sentiment Analysis) and Multiple Regression^1,2,3,4 and conclude that the CHH 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 CHH stock.

Key Points

1. Understanding Buy, Sell, and Hold Ratings
2. Can machine learning predict?
3. Investment Risk

CHH Target Price Prediction Modeling Methodology

We consider Choice Hotels Stock Decision Process with Modular Neural Network (Social Media Sentiment Analysis) where A is the set of discrete actions of CHH 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(Multiple 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(Modular Neural Network (Social Media Sentiment Analysis)) X S(n):→ (n+3 month) $\begin{array}{l}\int e^x\mathrm{rx}\end{array}$

n:Time series to forecast

p:Price signals of CHH 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?

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

Sample Set: Neural Network
Stock/Index: CHH Choice Hotels
Time series to forecast n: 19 Nov 2022 for (n+3 month)

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

1. 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.
2. If the group of items does have offsetting risk positions (for example, a group of sales and expenses denominated in a foreign currency hedged together for foreign currency risk) then an entity shall present the hedging gains or losses in a separate line item in the statement of profit or loss and other comprehensive income. Consider, for example, a hedge of the foreign currency risk of a net position of foreign currency sales of FC100 and foreign currency expenses of FC80 using a forward exchange contract for FC20. The gain or loss on the forward exchange contract that is reclassified from the cash flow hedge reserve to profit or loss (when the net position affects profit or loss) shall be presented in a separate line item from the hedged sales and expenses. Moreover, if the sales occur in an earlier period than the expenses, the sales revenue is still measured at the spot exchange rate in accordance with IAS 21. The related hedging gain or loss is presented in a separate line item, so that profit or loss reflects the effect of hedging the net position, with a corresponding adjustment to the cash flow hedge reserve. When the hedged expenses affect profit or loss in a later period, the hedging gain or loss previously recognised in the cash flow hedge reserve on the sales is reclassified to profit or loss and presented as a separate line item from those that include the hedged expenses, which are measured at the spot exchange rate in accordance with IAS 21.
3. In the reporting period that includes the date of initial application of these amendments, an entity is not required to present the quantitative information required by paragraph 28(f) of IAS 8.
4. If there is a hedging relationship between a non-derivative monetary asset and a non-derivative monetary liability, changes in the foreign currency component of those financial instruments are presented in profit or loss.

*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

Choice Hotels assigned short-term B1 & long-term B2 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Social Media Sentiment Analysis) with Multiple Regression^1,2,3,4 and conclude that the CHH 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 CHH stock.

Financial State Forecast for CHH Choice Hotels Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	B1	B2
Operational Risk	67	39
Market Risk	64	48
Technical Analysis	74	83
Fundamental Analysis	44	60
Risk Unsystematic	44	41

Prediction Confidence Score

Trust metric by Neural Network: 72 out of 100 with 607 signals.

References

1. Dudik M, Langford J, Li L. 2011. Doubly robust policy evaluation and learning. In Proceedings of the 28th International Conference on Machine Learning, pp. 1097–104. La Jolla, CA: Int. Mach. Learn. Soc.
2. 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.
3. Chernozhukov V, Escanciano JC, Ichimura H, Newey WK. 2016b. Locally robust semiparametric estimation. arXiv:1608.00033 [math.ST]
4. Brailsford, T.J. R.W. Faff (1996), "An evaluation of volatility forecasting techniques," Journal of Banking Finance, 20, 419–438.
5. Lai TL, Robbins H. 1985. Asymptotically efficient adaptive allocation rules. Adv. Appl. Math. 6:4–22
6. Athey S, Bayati M, Imbens G, Zhaonan Q. 2019. Ensemble methods for causal effects in panel data settings. NBER Work. Pap. 25675
7. Hill JL. 2011. Bayesian nonparametric modeling for causal inference. J. Comput. Graph. Stat. 20:217–40

Frequently Asked Questions

Q: What is the prediction methodology for CHH stock?
A: CHH stock prediction methodology: We evaluate the prediction models Modular Neural Network (Social Media Sentiment Analysis) and Multiple Regression
Q: Is CHH stock a buy or sell?
A: The dominant strategy among neural network is to Hold CHH Stock.
Q: Is Choice Hotels stock a good investment?
A: The consensus rating for Choice Hotels is Hold and assigned short-term B1 & long-term B2 forecasted stock rating.
Q: What is the consensus rating of CHH stock?
A: The consensus rating for CHH is Hold.
Q: What is the prediction period for CHH stock?
A: The prediction period for CHH is (n+3 month)

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