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

ONE Gas Research Report

Summary

With the advent of machine learning, numerous approaches have been proposed to forecast stock prices. Various models have been developed to date such as Recurrent Neural Networks, Long Short-Term Memory, Convolutional Neural Network sliding window, etc., but were not accurate enough. Here, the aim is to predict the price of a stock and compare the results obtained using three major algorithms namely Kalman filters, XGBoost and ARIMA. We evaluate ONE Gas prediction models with Modular Neural Network (CNN Layer) and Linear Regression1,2,3,4 and conclude that the OGS 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 OGS stock.

Key Points

  1. Prediction Modeling
  2. How do you know when a stock will go up or down?
  3. Decision Making

OGS Target Price Prediction Modeling Methodology

We consider ONE Gas Stock Decision Process with Modular Neural Network (CNN Layer) where A is the set of discrete actions of OGS 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(Linear Regression)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 (CNN Layer)) X S(n):→ (n+6 month) R = 1 0 0 0 1 0 0 0 1

n:Time series to forecast

p:Price signals of OGS stock

j:Nash equilibria (Neural Network)

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?

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

Sample Set: Neural Network
Stock/Index: OGS ONE Gas
Time series to forecast n: 19 Nov 2022 for (n+6 month)

According to price forecasts for (n+6 month) period: The dominant strategy among neural network is to Hold OGS 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 ONE Gas

  1. If items are hedged together as a group in a cash flow hedge, they might affect different line items in the statement of profit or loss and other comprehensive income. The presentation of hedging gains or losses in that statement depends on the group of items
  2. For example, Entity A, whose functional currency is its local currency, has a firm commitment to pay FC150,000 for advertising expenses in nine months' time and a firm commitment to sell finished goods for FC150,000 in 15 months' time. Entity A enters into a foreign currency derivative that settles in nine months' time under which it receives FC100 and pays CU70. Entity A has no other exposures to FC. Entity A does not manage foreign currency risk on a net basis. Hence, Entity A cannot apply hedge accounting for a hedging relationship between the foreign currency derivative and a net position of FC100 (consisting of FC150,000 of the firm purchase commitment—ie advertising services—and FC149,900 (of the FC150,000) of the firm sale commitment) for a nine-month period.
  3. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss. However, the entity may transfer the cumulative gain or loss within equity.
  4. When applying the effective interest method, an entity generally amortises any fees, points paid or received, transaction costs and other premiums or discounts that are included in the calculation of the effective interest rate over the expected life of the financial instrument. However, a shorter period is used if this is the period to which the fees, points paid or received, transaction costs, premiums or discounts relate. This will be the case when the variable to which the fees, points paid or received, transaction costs, premiums or discounts relate is repriced to market rates before the expected maturity of the financial instrument. In such a case, the appropriate amortisation period is the period to the next such repricing date. For example, if a premium or discount on a floating-rate financial instrument reflects the interest that has accrued on that financial instrument since the interest was last paid, or changes in the market rates since the floating interest rate was reset to the market rates, it will be amortised to the next date when the floating interest is reset to market rates. This is because the premium or discount relates to the period to the next interest reset date because, at that date, the variable to which the premium or discount relates (ie interest rates) is reset to the market rates. If, however, the premium or discount results from a change in the credit spread over the floating rate specified in the financial instrument, or other variables that are not reset to the market rates, it is amortised over the expected life of the financial instrument.

*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

ONE Gas assigned short-term B2 & long-term B2 forecasted stock rating. We evaluate the prediction models Modular Neural Network (CNN Layer) with Linear Regression1,2,3,4 and conclude that the OGS 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 OGS stock.

Financial State Forecast for OGS ONE Gas Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*B2B2
Operational Risk 3931
Market Risk5672
Technical Analysis4083
Fundamental Analysis8635
Risk Unsystematic4041

Prediction Confidence Score

Trust metric by Neural Network: 86 out of 100 with 724 signals.

References

  1. J. Spall. Multivariate stochastic approximation using a simultaneous perturbation gradient approximation. IEEE Transactions on Automatic Control, 37(3):332–341, 1992.
  2. Candès E, Tao T. 2007. The Dantzig selector: statistical estimation when p is much larger than n. Ann. Stat. 35:2313–51
  3. Christou, C., P. A. V. B. Swamy G. S. Tavlas (1996), "Modelling optimal strategies for the allocation of wealth in multicurrency investments," International Journal of Forecasting, 12, 483–493.
  4. Byron, R. P. O. Ashenfelter (1995), "Predicting the quality of an unborn grange," Economic Record, 71, 40–53.
  5. Breiman L. 1993. Better subset selection using the non-negative garotte. Tech. Rep., Univ. Calif., Berkeley
  6. S. Bhatnagar and K. Lakshmanan. An online actor-critic algorithm with function approximation for con- strained Markov decision processes. Journal of Optimization Theory and Applications, 153(3):688–708, 2012.
  7. Bai J. 2003. Inferential theory for factor models of large dimensions. Econometrica 71:135–71
Frequently Asked QuestionsQ: What is the prediction methodology for OGS stock?
A: OGS stock prediction methodology: We evaluate the prediction models Modular Neural Network (CNN Layer) and Linear Regression
Q: Is OGS stock a buy or sell?
A: The dominant strategy among neural network is to Hold OGS Stock.
Q: Is ONE Gas stock a good investment?
A: The consensus rating for ONE Gas is Hold and assigned short-term B2 & long-term B2 forecasted stock rating.
Q: What is the consensus rating of OGS stock?
A: The consensus rating for OGS is Hold.
Q: What is the prediction period for OGS stock?
A: The prediction period for OGS is (n+6 month)

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