Modelling A.I. in Economics

SCI Options & Futures Prediction

Machine Learning refers to a concept in which a machine has been programmed to learn specific patterns from historical data using powerful algorithms and make predictions in future based on the patterns it learnt. Machine learning is a branch of Artificial Intelligence (AI), the term proposed in 1959 by Arthur Samuel who defined it as the ability of computers or machines to learn new rules and concepts from data without being explicitly programmed. We evaluate Service Corporation International prediction models with Modular Neural Network (Market Volatility Analysis) and Chi-Square1,2,3,4 and conclude that the SCI stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy SCI stock.


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

Key Points

  1. What is the use of Markov decision process?
  2. How do you know when a stock will go up or down?
  3. What is the best way to predict stock prices?

SCI Target Price Prediction Modeling Methodology

Prediction of future movement of stock prices has been a subject matter of many research work. In this work, we propose a hybrid approach for stock price prediction using machine learning and deep learning-based methods. We consider Service Corporation International Stock Decision Process with Chi-Square where A is the set of discrete actions of SCI 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(Chi-Square)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 Volatility Analysis)) X S(n):→ (n+8 weeks) i = 1 n a i

n:Time series to forecast

p:Price signals of SCI 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?

SCI Stock Forecast (Buy or Sell) for (n+8 weeks)


Sample Set: Neural Network
Stock/Index: SCI Service Corporation International
Time series to forecast n: 02 Nov 2022 for (n+8 weeks)

According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy SCI 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 Service Corporation International

  1. 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.
  2. The fact that a derivative is in or out of the money when it is designated as a hedging instrument does not in itself mean that a qualitative assessment is inappropriate. It depends on the circumstances whether hedge ineffectiveness arising from that fact could have a magnitude that a qualitative assessment would not adequately capture.
  3. The change in the value of the hedged item determined using a hypothetical derivative may also be used for the purpose of assessing whether a hedging relationship meets the hedge effectiveness requirements.
  4. If the holder cannot assess the conditions in paragraph B4.1.21 at initial recognition, the tranche must be measured at fair value through profit or loss. If the underlying pool of instruments can change after initial recognition in such a way that the pool may not meet the conditions in paragraphs B4.1.23–B4.1.24, the tranche does not meet the conditions in paragraph B4.1.21 and must be measured at fair value through profit or loss. However, if the underlying pool includes instruments that are collateralised by assets that do not meet the conditions in paragraphs B4.1.23–B4.1.24, the ability to take possession of such assets shall be disregarded for the purposes of applying this paragraph unless the entity acquired the tranche with the intention of controlling the collateral.

*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

Service Corporation International assigned short-term Baa2 & long-term B3 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Market Volatility Analysis) with Chi-Square1,2,3,4 and conclude that the SCI stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period: The dominant strategy among neural network is to Buy SCI stock.

Financial State Forecast for SCI Service Corporation International Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Baa2B3
Operational Risk 4451
Market Risk8030
Technical Analysis8650
Fundamental Analysis6957
Risk Unsystematic8344

Prediction Confidence Score

Trust metric by Neural Network: 85 out of 100 with 690 signals.

References

  1. Athey S, Mobius MM, Pál J. 2017c. The impact of aggregators on internet news consumption. Unpublished manuscript, Grad. School Bus., Stanford Univ., Stanford, CA
  2. Imbens GW, Lemieux T. 2008. Regression discontinuity designs: a guide to practice. J. Econom. 142:615–35
  3. E. van der Pol and F. A. Oliehoek. Coordinated deep reinforcement learners for traffic light control. NIPS Workshop on Learning, Inference and Control of Multi-Agent Systems, 2016.
  4. F. A. Oliehoek and C. Amato. A Concise Introduction to Decentralized POMDPs. SpringerBriefs in Intelligent Systems. Springer, 2016
  5. J. Filar, D. Krass, and K. Ross. Percentile performance criteria for limiting average Markov decision pro- cesses. IEEE Transaction of Automatic Control, 40(1):2–10, 1995.
  6. Bertsimas D, King A, Mazumder R. 2016. Best subset selection via a modern optimization lens. Ann. Stat. 44:813–52
  7. Hastie T, Tibshirani R, Tibshirani RJ. 2017. Extended comparisons of best subset selection, forward stepwise selection, and the lasso. arXiv:1707.08692 [stat.ME]
Frequently Asked QuestionsQ: What is the prediction methodology for SCI stock?
A: SCI stock prediction methodology: We evaluate the prediction models Modular Neural Network (Market Volatility Analysis) and Chi-Square
Q: Is SCI stock a buy or sell?
A: The dominant strategy among neural network is to Buy SCI Stock.
Q: Is Service Corporation International stock a good investment?
A: The consensus rating for Service Corporation International is Buy and assigned short-term Baa2 & long-term B3 forecasted stock rating.
Q: What is the consensus rating of SCI stock?
A: The consensus rating for SCI is Buy.
Q: What is the prediction period for SCI stock?
A: The prediction period for SCI is (n+8 weeks)

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