Modelling A.I. in Economics

Should You Buy Now or Wait? MCY Stock Forecast (Forecast)

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 evaluate Mercury General prediction models with Ensemble Learning (ML) and Chi-Square1,2,3,4 and conclude that the MCY 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 Hold MCY stock.


Keywords: MCY, Mercury General, stock forecast, machine learning based prediction, risk rating, buy-sell behaviour, stock analysis, target price analysis, options and futures.

Key Points

  1. How do you decide buy or sell a stock?
  2. How do predictive algorithms actually work?
  3. What is prediction in deep learning?

MCY Target Price Prediction Modeling Methodology

The stock market has been an attractive field for a large number of organizers and investors to derive useful predictions. Fundamental knowledge of stock market can be utilised with technical indicators to investigate different perspectives of the financial market; also, the influence of various events, financial news, and/or opinions on investors' decisions and hence, market trends have been observed. Such information can be exploited to make reliable predictions and achieve higher profitability. Computational intelligence has emerged with various deep neural network (DNN) techniques to address complex stock market problems. We consider Mercury General Stock Decision Process with Chi-Square where A is the set of discrete actions of MCY 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(Ensemble Learning (ML)) X S(n):→ (n+6 month) i = 1 n a i

n:Time series to forecast

p:Price signals of MCY 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?

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

Sample Set: Neural Network
Stock/Index: MCY Mercury General
Time series to forecast n: 01 Nov 2022 for (n+6 month)

According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold MCY 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 Mercury General

  1. For the purpose of applying paragraphs B4.1.11(b) and B4.1.12(b), irrespective of the event or circumstance that causes the early termination of the contract, a party may pay or receive reasonable compensation for that early termination. For example, a party may pay or receive reasonable compensation when it chooses to terminate the contract early (or otherwise causes the early termination to occur).
  2. If a put option obligation written by an entity or call option right held by an entity prevents a transferred asset from being derecognised and the entity measures the transferred asset at amortised cost, the associated liability is measured at its cost (ie the consideration received) adjusted for the amortisation of any difference between that cost and the gross carrying amount of the transferred asset at the expiration date of the option. For example, assume that the gross carrying amount of the asset on the date of the transfer is CU98 and that the consideration received is CU95. The gross carrying amount of the asset on the option exercise date will be CU100. The initial carrying amount of the associated liability is CU95 and the difference between CU95 and CU100 is recognised in profit or loss using the effective interest method. If the option is exercised, any difference between the carrying amount of the associated liability and the exercise price is recognised in profit or loss.
  3. The business model may be to hold assets to collect contractual cash flows even if the entity sells financial assets when there is an increase in the assets' credit risk. To determine whether there has been an increase in the assets' credit risk, the entity considers reasonable and supportable information, including forward looking information. Irrespective of their frequency and value, sales due to an increase in the assets' credit risk are not inconsistent with a business model whose objective is to hold financial assets to collect contractual cash flows because the credit quality of financial assets is relevant to the entity's ability to collect contractual cash flows. Credit risk management activities that are aimed at minimising potential credit losses due to credit deterioration are integral to such a business model. Selling a financial asset because it no longer meets the credit criteria specified in the entity's documented investment policy is an example of a sale that has occurred due to an increase in credit risk. However, in the absence of such a policy, the entity may demonstrate in other ways that the sale occurred due to an increase in credit risk.
  4. As noted in paragraph B4.3.1, when an entity becomes a party to a hybrid contract with a host that is not an asset within the scope of this Standard and with one or more embedded derivatives, paragraph 4.3.3 requires the entity to identify any such embedded derivative, assess whether it is required to be separated from the host contract and, for those that are required to be separated, measure the derivatives at fair value at initial recognition and subsequently. These requirements can be more complex, or result in less reliable measures, than measuring the entire instrument at fair value through profit or loss. For that reason this Standard permits the entire hybrid contract to be designated as at fair value through 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

Mercury General assigned short-term B2 & long-term Ba3 forecasted stock rating. We evaluate the prediction models Ensemble Learning (ML) with Chi-Square1,2,3,4 and conclude that the MCY 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 Hold MCY stock.

Financial State Forecast for MCY Mercury General Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B2Ba3
Operational Risk 5653
Market Risk5780
Technical Analysis4073
Fundamental Analysis3634
Risk Unsystematic7986

Prediction Confidence Score

Trust metric by Neural Network: 84 out of 100 with 796 signals.

References

  1. Andrews, D. W. K. W. Ploberger (1994), "Optimal tests when a nuisance parameter is present only under the alternative," Econometrica, 62, 1383–1414.
  2. Clements, M. P. D. F. Hendry (1997), "An empirical study of seasonal unit roots in forecasting," International Journal of Forecasting, 13, 341–355.
  3. Cortes C, Vapnik V. 1995. Support-vector networks. Mach. Learn. 20:273–97
  4. Mikolov T, Chen K, Corrado GS, Dean J. 2013a. Efficient estimation of word representations in vector space. arXiv:1301.3781 [cs.CL]
  5. J. Ott. A Markov decision model for a surveillance application and risk-sensitive Markov decision processes. PhD thesis, Karlsruhe Institute of Technology, 2010.
  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. Varian HR. 2014. Big data: new tricks for econometrics. J. Econ. Perspect. 28:3–28
Frequently Asked QuestionsQ: What is the prediction methodology for MCY stock?
A: MCY stock prediction methodology: We evaluate the prediction models Ensemble Learning (ML) and Chi-Square
Q: Is MCY stock a buy or sell?
A: The dominant strategy among neural network is to Hold MCY Stock.
Q: Is Mercury General stock a good investment?
A: The consensus rating for Mercury General is Hold and assigned short-term B2 & long-term Ba3 forecasted stock rating.
Q: What is the consensus rating of MCY stock?
A: The consensus rating for MCY is Hold.
Q: What is the prediction period for MCY stock?
A: The prediction period for MCY is (n+6 month)

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