Global Water Resources, Inc. 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 Global Water Resources, Inc. prediction models with Modular Neural Network (Financial Sentiment Analysis) and ElasticNet Regression1,2,3,4 and conclude that the GWR:TSX 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 Sell GWR:TSX stock.

## Key Points

1. What are main components of Markov decision process?
2. How can neural networks improve predictions?
3. Can statistics predict the future?

## GWR:TSX Target Price Prediction Modeling Methodology

We consider Global Water Resources, Inc. Stock Decision Process with Modular Neural Network (Financial Sentiment Analysis) where A is the set of discrete actions of GWR:TSX 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(ElasticNet Regression)5,6,7= $\begin{array}{cccc}{p}_{a1}& {p}_{a2}& \dots & {p}_{1n}\\ & ⋮\\ {p}_{j1}& {p}_{j2}& \dots & {p}_{jn}\\ & ⋮\\ {p}_{k1}& {p}_{k2}& \dots & {p}_{kn}\\ & ⋮\\ {p}_{n1}& {p}_{n2}& \dots & {p}_{nn}\end{array}$ X R(Modular Neural Network (Financial Sentiment Analysis)) X S(n):→ (n+3 month) $∑ i = 1 n s i$

n:Time series to forecast

p:Price signals of GWR:TSX stock

j:Nash equilibria (Neural Network)

k:Dominated move

a:Best response for target price

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## GWR:TSX Stock Forecast (Buy or Sell) for (n+3 month)

Sample Set: Neural Network
Stock/Index: GWR:TSX Global Water Resources, Inc.
Time series to forecast n: 24 Nov 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Sell GWR:TSX 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 Global Water Resources, Inc.

1. An embedded prepayment option in an interest-only or principal-only strip is closely related to the host contract provided the host contract (i) initially resulted from separating the right to receive contractual cash flows of a financial instrument that, in and of itself, did not contain an embedded derivative, and (ii) does not contain any terms not present in the original host debt contract.
2. For the purposes of applying the requirement in paragraph 5.7.7(a), credit risk is different from asset-specific performance risk. Asset-specific performance risk is not related to the risk that an entity will fail to discharge a particular obligation but instead it is related to the risk that a single asset or a group of assets will perform poorly (or not at all).
3. If there are changes in circumstances that affect hedge effectiveness, an entity may have to change the method for assessing whether a hedging relationship meets the hedge effectiveness requirements in order to ensure that the relevant characteristics of the hedging relationship, including the sources of hedge ineffectiveness, are still captured.
4. For example, when the critical terms (such as the nominal amount, maturity and underlying) of the hedging instrument and the hedged item match or are closely aligned, it might be possible for an entity to conclude on the basis of a qualitative assessment of those critical terms that the hedging instrument and the hedged item have values that will generally move in the opposite direction because of the same risk and hence that an economic relationship exists between the hedged item and the hedging instrument (see paragraphs B6.4.4–B6.4.6).

*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

Global Water Resources, Inc. assigned short-term B1 & long-term B1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Financial Sentiment Analysis) with ElasticNet Regression1,2,3,4 and conclude that the GWR:TSX 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 Sell GWR:TSX stock.

### Financial State Forecast for GWR:TSX Global Water Resources, Inc. Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B1B1
Operational Risk 5733
Market Risk6944
Technical Analysis6161
Fundamental Analysis3185
Risk Unsystematic9061

### Prediction Confidence Score

Trust metric by Neural Network: 78 out of 100 with 767 signals.

## References

1. Armstrong, J. S. M. C. Grohman (1972), "A comparative study of methods for long-range market forecasting," Management Science, 19, 211–221.
2. V. Borkar. An actor-critic algorithm for constrained Markov decision processes. Systems & Control Letters, 54(3):207–213, 2005.
3. Matzkin RL. 2007. Nonparametric identification. In Handbook of Econometrics, Vol. 6B, ed. J Heckman, E Learner, pp. 5307–68. Amsterdam: Elsevier
4. V. Konda and J. Tsitsiklis. Actor-Critic algorithms. In Proceedings of Advances in Neural Information Processing Systems 12, pages 1008–1014, 2000
5. Bengio Y, Schwenk H, Senécal JS, Morin F, Gauvain JL. 2006. Neural probabilistic language models. In Innovations in Machine Learning: Theory and Applications, ed. DE Holmes, pp. 137–86. Berlin: Springer
6. Belsley, D. A. (1988), "Modelling and forecast reliability," International Journal of Forecasting, 4, 427–447.
7. Dudik M, Erhan D, Langford J, Li L. 2014. Doubly robust policy evaluation and optimization. Stat. Sci. 29:485–511
Frequently Asked QuestionsQ: What is the prediction methodology for GWR:TSX stock?
A: GWR:TSX stock prediction methodology: We evaluate the prediction models Modular Neural Network (Financial Sentiment Analysis) and ElasticNet Regression
Q: Is GWR:TSX stock a buy or sell?
A: The dominant strategy among neural network is to Sell GWR:TSX Stock.
Q: Is Global Water Resources, Inc. stock a good investment?
A: The consensus rating for Global Water Resources, Inc. is Sell and assigned short-term B1 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of GWR:TSX stock?
A: The consensus rating for GWR:TSX is Sell.
Q: What is the prediction period for GWR:TSX stock?
A: The prediction period for GWR:TSX is (n+3 month)

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