Modelling A.I. in Economics

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

Visa Research Report

Summary

This paper surveys machine learning techniques for stock market prediction. The prediction of stock markets is regarded as a challenging task of financial time series prediction. We evaluate Visa prediction models with Inductive Learning (ML) and Logistic Regression1,2,3,4 and conclude that the V 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 V stock.

Key Points

  1. Can we predict stock market using machine learning?
  2. Operational Risk
  3. How useful are statistical predictions?

V Target Price Prediction Modeling Methodology

We consider Visa Stock Decision Process with Inductive Learning (ML) where A is the set of discrete actions of V 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(Logistic 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(Inductive Learning (ML)) X S(n):→ (n+3 month) e x rx

n:Time series to forecast

p:Price signals of V 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?

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

Sample Set: Neural Network
Stock/Index: V Visa
Time series to forecast n: 18 Nov 2022 for (n+3 month)

According to price forecasts for (n+3 month) period: The dominant strategy among neural network is to Hold V 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 Visa

  1. In the reporting period that includes the date of initial application of these amendments, an entity is not required to present the quantitative information required by paragraph 28(f) of IAS 8.
  2. Interest Rate Benchmark Reform, which amended IFRS 9, IAS 39 and IFRS 7, issued in September 2019, added Section 6.8 and amended paragraph 7.2.26. An entity shall apply these amendments for annual periods beginning on or after 1 January 2020. Earlier application is permitted. If an entity applies these amendments for an earlier period, it shall disclose that fact.
  3. If an entity prepares interim financial reports in accordance with IAS 34 Interim Financial Reporting the entity need not apply the requirements in this Standard to interim periods prior to the date of initial application if it is impracticable (as defined in IAS 8).
  4. A portfolio of financial assets that is managed and whose performance is evaluated on a fair value basis (as described in paragraph 4.2.2(b)) is neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets. The entity is primarily focused on fair value information and uses that information to assess the assets' performance and to make decisions. In addition, a portfolio of financial assets that meets the definition of held for trading is not held to collect contractual cash flows or held both to collect contractual cash flows and to sell financial assets. For such portfolios, the collection of contractual cash flows is only incidental to achieving the business model's objective. Consequently, such portfolios of financial assets must be measured 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

Visa assigned short-term Caa2 & long-term B2 forecasted stock rating. We evaluate the prediction models Inductive Learning (ML) with Logistic Regression1,2,3,4 and conclude that the V 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 V stock.

Financial State Forecast for V Visa Stock Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Caa2B2
Operational Risk 6730
Market Risk3133
Technical Analysis4378
Fundamental Analysis4787
Risk Unsystematic3638

Prediction Confidence Score

Trust metric by Neural Network: 92 out of 100 with 741 signals.

References

  1. Bamler R, Mandt S. 2017. Dynamic word embeddings via skip-gram filtering. In Proceedings of the 34th Inter- national Conference on Machine Learning, pp. 380–89. La Jolla, CA: Int. Mach. Learn. Soc.
  2. Bennett J, Lanning S. 2007. The Netflix prize. In Proceedings of KDD Cup and Workshop 2007, p. 35. New York: ACM
  3. Athey S. 2019. The impact of machine learning on economics. In The Economics of Artificial Intelligence: An Agenda, ed. AK Agrawal, J Gans, A Goldfarb. Chicago: Univ. Chicago Press. In press
  4. D. Bertsekas and J. Tsitsiklis. Neuro-dynamic programming. Athena Scientific, 1996.
  5. V. Borkar and R. Jain. Risk-constrained Markov decision processes. IEEE Transaction on Automatic Control, 2014
  6. P. Artzner, F. Delbaen, J. Eber, and D. Heath. Coherent measures of risk. Journal of Mathematical Finance, 9(3):203–228, 1999
  7. M. L. Littman. Markov games as a framework for multi-agent reinforcement learning. In Ma- chine Learning, Proceedings of the Eleventh International Conference, Rutgers University, New Brunswick, NJ, USA, July 10-13, 1994, pages 157–163, 1994
Frequently Asked QuestionsQ: What is the prediction methodology for V stock?
A: V stock prediction methodology: We evaluate the prediction models Inductive Learning (ML) and Logistic Regression
Q: Is V stock a buy or sell?
A: The dominant strategy among neural network is to Hold V Stock.
Q: Is Visa stock a good investment?
A: The consensus rating for Visa is Hold and assigned short-term Caa2 & long-term B2 forecasted stock rating.
Q: What is the consensus rating of V stock?
A: The consensus rating for V is Hold.
Q: What is the prediction period for V stock?
A: The prediction period for V is (n+3 month)



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