Modelling A.I. in Economics

LON:BIOG BIOTECH GROWTH TRUST (THE) PLC

Outlook: BIOTECH GROWTH TRUST (THE) PLC assigned short-term Baa2 & long-term B2 forecasted stock rating.
Dominant Strategy : Wait until speculative trend diminishes
Time series to forecast n: 18 Dec 2022 for (n+6 month)
Methodology : Reinforcement Machine Learning (ML)

Abstract

The stock market is one of the key sectors of a country's economy. It provides investors with an opportunity to invest and gain returns on their investment. Predicting the stock market is a very challenging task and has attracted serious interest from researchers from many fields such as statistics, artificial intelligence, economics, and finance. An accurate prediction of the stock market reduces investment risk in the market. Different approaches have been used to predict the stock market. The performances of Machine learning (ML) models are typically superior to those of statistical and econometric models. (Rouf, N., Malik, M.B., Arif, T., Sharma, S., Singh, S., Aich, S. and Kim, H.C., 2021. Stock market prediction using machine learning techniques: a decade survey on methodologies, recent developments, and future directions. Electronics, 10(21), p.2717.) We evaluate BIOTECH GROWTH TRUST (THE) PLC prediction models with Reinforcement Machine Learning (ML) and Paired T-Test1,2,3,4 and conclude that the LON:BIOG stock is predictable in the short/long term. According to price forecasts for (n+6 month) period, the dominant strategy among neural network is: Wait until speculative trend diminishes

Key Points

  1. What is the use of Markov decision process?
  2. Is it better to buy and sell or hold?
  3. Decision Making

LON:BIOG Target Price Prediction Modeling Methodology

We consider BIOTECH GROWTH TRUST (THE) PLC Decision Process with Reinforcement Machine Learning (ML) where A is the set of discrete actions of LON:BIOG 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(Paired T-Test)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(Reinforcement Machine Learning (ML)) X S(n):→ (n+6 month) i = 1 n s i

n:Time series to forecast

p:Price signals of LON:BIOG 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?

LON:BIOG Stock Forecast (Buy or Sell) for (n+6 month)

Sample Set: Neural Network
Stock/Index: LON:BIOG BIOTECH GROWTH TRUST (THE) PLC
Time series to forecast n: 18 Dec 2022 for (n+6 month)

According to price forecasts for (n+6 month) 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%

Adjusted IFRS* Prediction Methods for BIOTECH GROWTH TRUST (THE) PLC

  1. If, at the date of initial application, it is impracticable (as defined in IAS 8) for an entity to assess a modified time value of money element in accordance with paragraphs B4.1.9B–B4.1.9D on the basis of the facts and circumstances that existed at the initial recognition of the financial asset, an entity shall assess the contractual cash flow characteristics of that financial asset on the basis of the facts and circumstances that existed at the initial recognition of the financial asset without taking into account the requirements related to the modification of the time value of money element in paragraphs B4.1.9B–B4.1.9D. (See also paragraph 42R of IFRS 7.)
  2. Paragraph 4.1.1(b) requires an entity to classify a financial asset on the basis of its contractual cash flow characteristics if the financial asset is held within a business model whose objective is to hold assets to collect contractual cash flows or within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, unless paragraph 4.1.5 applies. To do so, the condition in paragraphs 4.1.2(b) and 4.1.2A(b) requires an entity to determine whether the asset's contractual cash flows are solely payments of principal and interest on the principal amount outstanding.
  3. However, depending on the nature of the financial instruments and the credit risk information available for particular groups of financial instruments, an entity may not be able to identify significant changes in credit risk for individual financial instruments before the financial instrument becomes past due. This may be the case for financial instruments such as retail loans for which there is little or no updated credit risk information that is routinely obtained and monitored on an individual instrument until a customer breaches the contractual terms. If changes in the credit risk for individual financial instruments are not captured before they become past due, a loss allowance based only on credit information at an individual financial instrument level would not faithfully represent the changes in credit risk since initial recognition.
  4. An entity's documentation of the hedging relationship includes how it will assess the hedge effectiveness requirements, including the method or methods used. The documentation of the hedging relationship shall be updated for any changes to the methods (see paragraph B6.4.17).

*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

BIOTECH GROWTH TRUST (THE) PLC assigned short-term Baa2 & long-term B2 forecasted stock rating. We evaluate the prediction models Reinforcement Machine Learning (ML) with Paired T-Test1,2,3,4 and conclude that the LON:BIOG stock is predictable in the short/long term. According to price forecasts for (n+6 month) period, the dominant strategy among neural network is: Wait until speculative trend diminishes

Financial State Forecast for LON:BIOG BIOTECH GROWTH TRUST (THE) PLC Options & Futures

Rating Short-Term Long-Term Senior
Outlook*Baa2B2
Operational Risk 7732
Market Risk8750
Technical Analysis8778
Fundamental Analysis4035
Risk Unsystematic8979

Prediction Confidence Score

Trust metric by Neural Network: 90 out of 100 with 587 signals.

References

  1. Robins J, Rotnitzky A. 1995. Semiparametric efficiency in multivariate regression models with missing data. J. Am. Stat. Assoc. 90:122–29
  2. Çetinkaya, A., Zhang, Y.Z., Hao, Y.M. and Ma, X.Y., How do you decide buy or sell a stock?(SAIC Stock Forecast). AC Investment Research Journal, 101(3).
  3. Farrell MH, Liang T, Misra S. 2018. Deep neural networks for estimation and inference: application to causal effects and other semiparametric estimands. arXiv:1809.09953 [econ.EM]
  4. Cortes C, Vapnik V. 1995. Support-vector networks. Mach. Learn. 20:273–97
  5. S. J. Russell and A. Zimdars. Q-decomposition for reinforcement learning agents. In Machine Learning, Proceedings of the Twentieth International Conference (ICML 2003), August 21-24, 2003, Washington, DC, USA, pages 656–663, 2003.
  6. 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
  7. Doudchenko N, Imbens GW. 2016. Balancing, regression, difference-in-differences and synthetic control methods: a synthesis. NBER Work. Pap. 22791
Frequently Asked QuestionsQ: What is the prediction methodology for LON:BIOG stock?
A: LON:BIOG stock prediction methodology: We evaluate the prediction models Reinforcement Machine Learning (ML) and Paired T-Test
Q: Is LON:BIOG stock a buy or sell?
A: The dominant strategy among neural network is to Wait until speculative trend diminishes LON:BIOG Stock.
Q: Is BIOTECH GROWTH TRUST (THE) PLC stock a good investment?
A: The consensus rating for BIOTECH GROWTH TRUST (THE) PLC is Wait until speculative trend diminishes and assigned short-term Baa2 & long-term B2 forecasted stock rating.
Q: What is the consensus rating of LON:BIOG stock?
A: The consensus rating for LON:BIOG is Wait until speculative trend diminishes.
Q: What is the prediction period for LON:BIOG stock?
A: The prediction period for LON:BIOG is (n+6 month)

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