Modelling A.I. in Economics

CAT Caterpillar Inc. Common Stock

Outlook: Caterpillar Inc. Common Stock assigned short-term Ba1 & long-term Ba1 estimated rating.
Dominant Strategy : Buy
Time series to forecast n: 02 Jan 2023 for (n+8 weeks)
Methodology : Reinforcement Machine Learning (ML)

Abstract

Neural networks, as an intelligent data mining method, have been used in many different challenging pattern recognition problems such as stock market prediction. However, there is no formal method to determine the optimal neural network for prediction purpose in the literature. In this paper, two kinds of neural networks, a feed forward multi layer Perceptron (MLP) and an Elman recurrent network, are used to predict a company's stock value based on its stock share value history.(Bogle, S.A. and Potter, W.D., 2015. SentAMaL-a sentiment analysis machine learning stock predictive model. In Proceedings on the international conference on artificial intelligence (ICAI) (p. 610). The Steering Committee of The World Congress in Computer Science, Computer Engineering and Applied Computing (WorldComp).) We evaluate Caterpillar Inc. Common Stock prediction models with Reinforcement Machine Learning (ML) and Beta1,2,3,4 and conclude that the CAT stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period, the dominant strategy among neural network is: Buy

Key Points

  1. Which neural network is best for prediction?
  2. What are the most successful trading algorithms?
  3. Can statistics predict the future?

CAT Target Price Prediction Modeling Methodology

We consider Caterpillar Inc. Common Stock Decision Process with Reinforcement Machine Learning (ML) where A is the set of discrete actions of CAT 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(Beta)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+8 weeks) R = r 1 r 2 r 3

n:Time series to forecast

p:Price signals of CAT 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?

CAT Stock Forecast (Buy or Sell) for (n+8 weeks)

Sample Set: Neural Network
Stock/Index: CAT Caterpillar Inc. Common Stock
Time series to forecast n: 02 Jan 2023 for (n+8 weeks)

According to price forecasts for (n+8 weeks) period, the dominant strategy among neural network is: Buy

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 Caterpillar Inc. Common Stock

  1. 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.
  2. In some cases, the qualitative and non-statistical quantitative information available may be sufficient to determine that a financial instrument has met the criterion for the recognition of a loss allowance at an amount equal to lifetime expected credit losses. That is, the information does not need to flow through a statistical model or credit ratings process in order to determine whether there has been a significant increase in the credit risk of the financial instrument. In other cases, an entity may need to consider other information, including information from its statistical models or credit ratings processes.
  3. For hedges other than hedges of foreign currency risk, when an entity designates a non-derivative financial asset or a non-derivative financial liability measured at fair value through profit or loss as a hedging instrument, it may only designate the non-derivative financial instrument in its entirety or a proportion of it.
  4. 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.

*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

Caterpillar Inc. Common Stock assigned short-term Ba1 & long-term Ba1 estimated rating. We evaluate the prediction models Reinforcement Machine Learning (ML) with Beta1,2,3,4 and conclude that the CAT stock is predictable in the short/long term. According to price forecasts for (n+8 weeks) period, the dominant strategy among neural network is: Buy

CAT Caterpillar Inc. Common Stock Financial Analysis*

Rating Short-Term Long-Term Senior
Outlook*Ba1Ba1
Income StatementBaa2Ba1
Balance SheetCBa2
Leverage RatiosCaa2Ba3
Cash FlowB3Baa2
Rates of Return and ProfitabilityBaa2C

*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: 74 out of 100 with 610 signals.

References

  1. H. Kushner and G. Yin. Stochastic approximation algorithms and applications. Springer, 1997.
  2. Bessler, D. A. S. W. Fuller (1993), "Cointegration between U.S. wheat markets," Journal of Regional Science, 33, 481–501.
  3. D. Bertsekas. Min common/max crossing duality: A geometric view of conjugacy in convex optimization. Lab. for Information and Decision Systems, MIT, Tech. Rep. Report LIDS-P-2796, 2009
  4. N. B ̈auerle and A. Mundt. Dynamic mean-risk optimization in a binomial model. Mathematical Methods of Operations Research, 70(2):219–239, 2009.
  5. Friedberg R, Tibshirani J, Athey S, Wager S. 2018. Local linear forests. arXiv:1807.11408 [stat.ML]
  6. Rumelhart DE, Hinton GE, Williams RJ. 1986. Learning representations by back-propagating errors. Nature 323:533–36
  7. Vapnik V. 2013. The Nature of Statistical Learning Theory. Berlin: Springer
Frequently Asked QuestionsQ: What is the prediction methodology for CAT stock?
A: CAT stock prediction methodology: We evaluate the prediction models Reinforcement Machine Learning (ML) and Beta
Q: Is CAT stock a buy or sell?
A: The dominant strategy among neural network is to Buy CAT Stock.
Q: Is Caterpillar Inc. Common Stock stock a good investment?
A: The consensus rating for Caterpillar Inc. Common Stock is Buy and assigned short-term Ba1 & long-term Ba1 estimated rating.
Q: What is the consensus rating of CAT stock?
A: The consensus rating for CAT is Buy.
Q: What is the prediction period for CAT stock?
A: The prediction period for CAT is (n+8 weeks)

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