Modelling A.I. in Economics

MKC Stock Price Prediction (Forecast)

This paper tries to address the problem of stock market prediction leveraging artificial intelligence (AI) strategies. The stock market prediction can be modeled based on two principal analyses called technical and fundamental. In the technical analysis approach, the regression machine learning (ML) algorithms are employed to predict the stock price trend at the end of a business day based on the historical price data. In contrast, in the fundamental analysis, the classification ML algorithms are applied to classify the public sentiment based on news and social media. We evaluate McCormick & Company prediction models with Multi-Instance Learning (ML) and Sign Test1,2,3,4 and conclude that the MKC 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 MKC stock.


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

Key Points

  1. Is it better to buy and sell or hold?
  2. What is prediction in deep learning?
  3. Stock Rating

MKC Target Price Prediction Modeling Methodology

Social media comments have in the past had an instantaneous effect on stock markets. This paper investigates the sentiments expressed on the social media platform Twitter and their pr edictive impact on the Stock Market. We consider McCormick & Company Stock Decision Process with Sign Test where A is the set of discrete actions of MKC 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(Sign 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(Multi-Instance Learning (ML)) X S(n):→ (n+3 month) i = 1 n a i

n:Time series to forecast

p:Price signals of MKC 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?

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


Sample Set: Neural Network
Stock/Index: MKC McCormick & Company
Time series to forecast n: 03 Nov 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Hold MKC 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 McCormick & Company

  1. The accounting for the forward element of forward contracts in accordance with paragraph 6.5.16 applies only to the extent that the forward element relates to the hedged item (aligned forward element). The forward element of a forward contract relates to the hedged item if the critical terms of the forward contract (such as the nominal amount, life and underlying) are aligned with the hedged item. Hence, if the critical terms of the forward contract and the hedged item are not fully aligned, an entity shall determine the aligned forward element, ie how much of the forward element included in the forward contract (actual forward element) relates to the hedged item (and therefore should be treated in accordance with paragraph 6.5.16). An entity determines the aligned forward element using the valuation of the forward contract that would have critical terms that perfectly match the hedged item.
  2. One of the defining characteristics of a derivative is that it has an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors. An option contract meets that definition because the premium is less than the investment that would be required to obtain the underlying financial instrument to which the option is linked. A currency swap that requires an initial exchange of different currencies of equal fair values meets the definition because it has a zero initial net investment.
  3. When a group of items that constitute a net position is designated as a hedged item, an entity shall designate the overall group of items that includes the items that can make up the net position. An entity is not permitted to designate a non-specific abstract amount of a net position. For example, an entity has a group of firm sale commitments in nine months' time for FC100 and a group of firm purchase commitments in 18 months' time for FC120. The entity cannot designate an abstract amount of a net position up to FC20. Instead, it must designate a gross amount of purchases and a gross amount of sales that together give rise to the hedged net position. An entity shall designate gross positions that give rise to the net position so that the entity is able to comply with the requirements for the accounting for qualifying hedging relationships.
  4. For a discontinued hedging relationship, when the interest rate benchmark on which the hedged future cash flows had been based is changed as required by interest rate benchmark reform, for the purpose of applying paragraph 6.5.12 in order to determine whether the hedged future cash flows are expected to occur, the amount accumulated in the cash flow hedge reserve for that hedging relationship shall be deemed to be based on the alternative benchmark rate on which the hedged future cash flows will be based.

*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

McCormick & Company assigned short-term B1 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Multi-Instance Learning (ML) with Sign Test1,2,3,4 and conclude that the MKC 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 MKC stock.

Financial State Forecast for MKC McCormick & Company Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B1Ba3
Operational Risk 7162
Market Risk3989
Technical Analysis3761
Fundamental Analysis7150
Risk Unsystematic7350

Prediction Confidence Score

Trust metric by Neural Network: 76 out of 100 with 780 signals.

References

  1. Athey S, Bayati M, Imbens G, Zhaonan Q. 2019. Ensemble methods for causal effects in panel data settings. NBER Work. Pap. 25675
  2. Rosenbaum PR, Rubin DB. 1983. The central role of the propensity score in observational studies for causal effects. Biometrika 70:41–55
  3. S. Bhatnagar. An actor-critic algorithm with function approximation for discounted cost constrained Markov decision processes. Systems & Control Letters, 59(12):760–766, 2010
  4. A. Tamar and S. Mannor. Variance adjusted actor critic algorithms. arXiv preprint arXiv:1310.3697, 2013.
  5. Hoerl AE, Kennard RW. 1970. Ridge regression: biased estimation for nonorthogonal problems. Technometrics 12:55–67
  6. Vilnis L, McCallum A. 2015. Word representations via Gaussian embedding. arXiv:1412.6623 [cs.CL]
  7. Athey S, Imbens G. 2016. Recursive partitioning for heterogeneous causal effects. PNAS 113:7353–60
Frequently Asked QuestionsQ: What is the prediction methodology for MKC stock?
A: MKC stock prediction methodology: We evaluate the prediction models Multi-Instance Learning (ML) and Sign Test
Q: Is MKC stock a buy or sell?
A: The dominant strategy among neural network is to Hold MKC Stock.
Q: Is McCormick & Company stock a good investment?
A: The consensus rating for McCormick & Company is Hold and assigned short-term B1 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of MKC stock?
A: The consensus rating for MKC is Hold.
Q: What is the prediction period for MKC stock?
A: The prediction period for MKC is (n+3 month)

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