Modelling A.I. in Economics

HCM HUTCHMED (China) Limited American Depositary Shares (Forecast)

Outlook: HUTCHMED (China) Limited American Depositary Shares assigned short-term Ba1 & long-term Ba1 forecasted stock rating.
Dominant Strategy : Wait until speculative trend diminishes
Time series to forecast n: 19 Dec 2022 for (n+16 weeks)
Methodology : Modular Neural Network (Financial Sentiment Analysis)

Abstract

Stock price prediction has always been a challenging task for the researchers in financial domain. While the Efficient Market Hypothesis claims that it is impossible to predict stock prices accurately, there are work in the literature that have demonstrated that stock price movements can be forecasted with a reasonable degree of accuracy, if appropriate variables are chosen and suitable predictive models are built using those variables. In this work, we present a robust and accurate framework of stock price prediction using statistical, machine learning and deep learning methods(Rao, P.S., Srinivas, K. and Mohan, A.K., 2020. A survey on stock market prediction using machine learning techniques. In ICDSMLA 2019 (pp. 923-931). Springer, Singapore.) We evaluate HUTCHMED (China) Limited American Depositary Shares prediction models with Modular Neural Network (Financial Sentiment Analysis) and Stepwise Regression1,2,3,4 and conclude that the HCM stock is predictable in the short/long term. According to price forecasts for (n+16 weeks) period, the dominant strategy among neural network is: Wait until speculative trend diminishes

Key Points

  1. What is prediction in deep learning?
  2. How can neural networks improve predictions?
  3. What are main components of Markov decision process?

HCM Target Price Prediction Modeling Methodology

We consider HUTCHMED (China) Limited American Depositary Shares Decision Process with Modular Neural Network (Financial Sentiment Analysis) where A is the set of discrete actions of HCM 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(Stepwise 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 (Financial Sentiment Analysis)) X S(n):→ (n+16 weeks) e x rx

n:Time series to forecast

p:Price signals of HCM 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?

HCM Stock Forecast (Buy or Sell) for (n+16 weeks)

Sample Set: Neural Network
Stock/Index: HCM HUTCHMED (China) Limited American Depositary Shares
Time series to forecast n: 19 Dec 2022 for (n+16 weeks)

According to price forecasts for (n+16 weeks) period, the dominant strategy among neural network is: Wait until speculative trend diminishes

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 (Grey to Black): *Technical Analysis%

IFRS Reconciliation Adjustments for HUTCHMED (China) Limited American Depositary Shares

  1. A net position is eligible for hedge accounting only if an entity hedges on a net basis for risk management purposes. Whether an entity hedges in this way is a matter of fact (not merely of assertion or documentation). Hence, an entity cannot apply hedge accounting on a net basis solely to achieve a particular accounting outcome if that would not reflect its risk management approach. Net position hedging must form part of an established risk management strategy. Normally this would be approved by key management personnel as defined in IAS 24.
  2. Hedge effectiveness is the extent to which changes in the fair value or the cash flows of the hedging instrument offset changes in the fair value or the cash flows of the hedged item (for example, when the hedged item is a risk component, the relevant change in fair value or cash flows of an item is the one that is attributable to the hedged risk). Hedge ineffectiveness is the extent to which the changes in the fair value or the cash flows of the hedging instrument are greater or less than those on the hedged item.
  3. At the date of initial application, an entity shall determine whether the treatment in paragraph 5.7.7 would create or enlarge an accounting mismatch in profit or loss on the basis of the facts and circumstances that exist at the date of initial application. This Standard shall be applied retrospectively on the basis of that determination.
  4. An entity may use practical expedients when measuring expected credit losses if they are consistent with the principles in paragraph 5.5.17. An example of a practical expedient is the calculation of the expected credit losses on trade receivables using a provision matrix. The entity would use its historical credit loss experience (adjusted as appropriate in accordance with paragraphs B5.5.51–B5.5.52) for trade receivables to estimate the 12-month expected credit losses or the lifetime expected credit losses on the financial assets as relevant. A provision matrix might, for example, specify fixed provision rates depending on the number of days that a trade receivable is past due (for example, 1 per cent if not past due, 2 per cent if less than 30 days past due, 3 per cent if more than 30 days but less than 90 days past due, 20 per cent if 90–180 days past due etc). Depending on the diversity of its customer base, the entity would use appropriate groupings if its historical credit loss experience shows significantly different loss patterns for different customer segments. Examples of criteria that might be used to group assets include geographical region, product type, customer rating, collateral or trade credit insurance and type of customer (such as wholesale or retail)

*International Financial Reporting Standards (IFRS) adjustment process involves reviewing the company's financial statements and identifying any differences between the company's current accounting practices and the requirements of the IFRS. If there are any such differences, neural network makes adjustments to financial statements to bring them into compliance with the IFRS.

Conclusions

HUTCHMED (China) Limited American Depositary Shares assigned short-term Ba1 & long-term Ba1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Financial Sentiment Analysis) with Stepwise Regression1,2,3,4 and conclude that the HCM stock is predictable in the short/long term. According to price forecasts for (n+16 weeks) period, the dominant strategy among neural network is: Wait until speculative trend diminishes

HCM HUTCHMED (China) Limited American Depositary Shares Financial Analysis*

Rating Short-Term Long-Term Senior
Outlook*Ba1Ba1
Income StatementCBaa2
Balance SheetB1Baa2
Leverage RatiosBa3C
Cash FlowCaa2Ba2
Rates of Return and ProfitabilityB3Baa2

*Financial analysis is the process of evaluating a company's financial performance and position by neural network. It involves reviewing the company's financial statements, including the balance sheet, income statement, and cash flow statement, as well as other financial reports and documents.
How does neural network examine financial reports and understand financial state of the company?

Prediction Confidence Score

Trust metric by Neural Network: 81 out of 100 with 798 signals.

References

  1. R. Rockafellar and S. Uryasev. Conditional value-at-risk for general loss distributions. Journal of Banking and Finance, 26(7):1443 – 1471, 2002
  2. Jiang N, Li L. 2016. Doubly robust off-policy value evaluation for reinforcement learning. In Proceedings of the 33rd International Conference on Machine Learning, pp. 652–61. La Jolla, CA: Int. Mach. Learn. Soc.
  3. Pennington J, Socher R, Manning CD. 2014. GloVe: global vectors for word representation. In Proceedings of the 2014 Conference on Empirical Methods on Natural Language Processing, pp. 1532–43. New York: Assoc. Comput. Linguist.
  4. R. Sutton and A. Barto. Reinforcement Learning. The MIT Press, 1998
  5. J. Peters, S. Vijayakumar, and S. Schaal. Natural actor-critic. In Proceedings of the Sixteenth European Conference on Machine Learning, pages 280–291, 2005.
  6. Allen, P. G. (1994), "Economic forecasting in agriculture," International Journal of Forecasting, 10, 81–135.
  7. Holland PW. 1986. Statistics and causal inference. J. Am. Stat. Assoc. 81:945–60
Frequently Asked QuestionsQ: What is the prediction methodology for HCM stock?
A: HCM stock prediction methodology: We evaluate the prediction models Modular Neural Network (Financial Sentiment Analysis) and Stepwise Regression
Q: Is HCM stock a buy or sell?
A: The dominant strategy among neural network is to Wait until speculative trend diminishes HCM Stock.
Q: Is HUTCHMED (China) Limited American Depositary Shares stock a good investment?
A: The consensus rating for HUTCHMED (China) Limited American Depositary Shares is Wait until speculative trend diminishes and assigned short-term Ba1 & long-term Ba1 forecasted stock rating.
Q: What is the consensus rating of HCM stock?
A: The consensus rating for HCM is Wait until speculative trend diminishes.
Q: What is the prediction period for HCM stock?
A: The prediction period for HCM is (n+16 weeks)

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