Modelling A.I. in Economics

Machine Learning stock prediction: FE Stock Prediction (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 FirstEnergy prediction models with Modular Neural Network (Market Direction Analysis) and Pearson Correlation1,2,3,4 and conclude that the FE 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 FE stock.


Keywords: FE, FirstEnergy, 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. What is Markov decision process in reinforcement learning?
  3. Market Signals

FE Target Price Prediction Modeling Methodology

The main perfect of this composition is to discover the stylish version to prognosticate the cost of the inventory request. During the procedure of analyzing the colorful ways and variables to remember, we plant that approaches similar as Random woodland, machine help Vector were not absolutely exploited. We consider FirstEnergy Stock Decision Process with Pearson Correlation where A is the set of discrete actions of FE 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(Pearson Correlation)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 (Market Direction Analysis)) X S(n):→ (n+6 month) i = 1 n s i

n:Time series to forecast

p:Price signals of FE 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?

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


Sample Set: Neural Network
Stock/Index: FE FirstEnergy
Time series to forecast n: 08 Nov 2022 for (n+6 month)

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

  1. For the purpose of applying the requirement in paragraph 6.5.12 in order to determine whether the hedged future cash flows are expected to occur, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform.
  2. An entity can also designate only changes in the cash flows or fair value of a hedged item above or below a specified price or other variable (a 'one-sided risk'). The intrinsic value of a purchased option hedging instrument (assuming that it has the same principal terms as the designated risk), but not its time value, reflects a one-sided risk in a hedged item. For example, an entity can designate the variability of future cash flow outcomes resulting from a price increase of a forecast commodity purchase. In such a situation, the entity designates only cash flow losses that result from an increase in the price above the specified level. The hedged risk does not include the time value of a purchased option, because the time value is not a component of the forecast transaction that affects profit or loss.
  3. 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
  4. Paragraph 4.1.1(a) requires an entity to classify financial assets on the basis of the entity's business model for managing the financial assets, unless paragraph 4.1.5 applies. An entity assesses whether its financial assets meet the condition in paragraph 4.1.2(a) or the condition in paragraph 4.1.2A(a) on the basis of the business model as determined by the entity's key management personnel (as defined in IAS 24 Related Party Disclosures).

*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

FirstEnergy assigned short-term Ba1 & long-term Ba2 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Market Direction Analysis) with Pearson Correlation1,2,3,4 and conclude that the FE 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 FE stock.

Financial State Forecast for FE FirstEnergy Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Ba1Ba2
Operational Risk 7268
Market Risk6169
Technical Analysis6189
Fundamental Analysis8068
Risk Unsystematic7748

Prediction Confidence Score

Trust metric by Neural Network: 75 out of 100 with 565 signals.

References

  1. Bamler R, Mandt S. 2017. Dynamic word embeddings via skip-gram filtering. In Proceedings of the 34th Inter- national Conference on Machine Learning, pp. 380–89. La Jolla, CA: Int. Mach. Learn. Soc.
  2. T. Morimura, M. Sugiyama, M. Kashima, H. Hachiya, and T. Tanaka. Nonparametric return distribution ap- proximation for reinforcement learning. In Proceedings of the 27th International Conference on Machine Learning, pages 799–806, 2010
  3. Hoerl AE, Kennard RW. 1970. Ridge regression: biased estimation for nonorthogonal problems. Technometrics 12:55–67
  4. Candès EJ, Recht B. 2009. Exact matrix completion via convex optimization. Found. Comput. Math. 9:717
  5. R. Howard and J. Matheson. Risk sensitive Markov decision processes. Management Science, 18(7):356– 369, 1972
  6. M. Ono, M. Pavone, Y. Kuwata, and J. Balaram. Chance-constrained dynamic programming with application to risk-aware robotic space exploration. Autonomous Robots, 39(4):555–571, 2015
  7. J. G. Schneider, W. Wong, A. W. Moore, and M. A. Riedmiller. Distributed value functions. In Proceedings of the Sixteenth International Conference on Machine Learning (ICML 1999), Bled, Slovenia, June 27 - 30, 1999, pages 371–378, 1999.
Frequently Asked QuestionsQ: What is the prediction methodology for FE stock?
A: FE stock prediction methodology: We evaluate the prediction models Modular Neural Network (Market Direction Analysis) and Pearson Correlation
Q: Is FE stock a buy or sell?
A: The dominant strategy among neural network is to Sell FE Stock.
Q: Is FirstEnergy stock a good investment?
A: The consensus rating for FirstEnergy is Sell and assigned short-term Ba1 & long-term Ba2 forecasted stock rating.
Q: What is the consensus rating of FE stock?
A: The consensus rating for FE is Sell.
Q: What is the prediction period for FE stock?
A: The prediction period for FE is (n+6 month)

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