Outlook: Gerdau S.A. Common Stock is assigned short-term Ba1 & long-term Ba1 estimated rating.
Time series to forecast n: 26 Jan 2023 for (n+4 weeks)
Methodology : Reinforcement Machine Learning (ML)

## Abstract

Gerdau S.A. Common Stock prediction model is evaluated with Reinforcement Machine Learning (ML) and ElasticNet Regression1,2,3,4 and it is concluded that the GGB stock is predictable in the short/long term. According to price forecasts for (n+4 weeks) period, the dominant strategy among neural network is: Buy

## Key Points

1. What is the best way to predict stock prices?
2. Understanding Buy, Sell, and Hold Ratings
3. Market Risk

## GGB Target Price Prediction Modeling Methodology

We consider Gerdau S.A. Common Stock Decision Process with Reinforcement Machine Learning (ML) where A is the set of discrete actions of GGB 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(ElasticNet Regression)5,6,7= $\begin{array}{cccc}{p}_{a1}& {p}_{a2}& \dots & {p}_{1n}\\ & ⋮\\ {p}_{j1}& {p}_{j2}& \dots & {p}_{jn}\\ & ⋮\\ {p}_{k1}& {p}_{k2}& \dots & {p}_{kn}\\ & ⋮\\ {p}_{n1}& {p}_{n2}& \dots & {p}_{nn}\end{array}$ X R(Reinforcement Machine Learning (ML)) X S(n):→ (n+4 weeks) $R=\left(\begin{array}{ccc}1& 0& 0\\ 0& 1& 0\\ 0& 0& 1\end{array}\right)$

n:Time series to forecast

p:Price signals of GGB 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?

## GGB Stock Forecast (Buy or Sell) for (n+4 weeks)

Sample Set: Neural Network
Stock/Index: GGB Gerdau S.A. Common Stock
Time series to forecast n: 26 Jan 2023 for (n+4 weeks)

According to price forecasts for (n+4 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 Gerdau S.A. Common Stock

1. In accordance with the hedge effectiveness requirements, the hedge ratio of the hedging relationship must be the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. Hence, if an entity hedges less than 100 per cent of the exposure on an item, such as 85 per cent, it shall designate the hedging relationship using a hedge ratio that is the same as that resulting from 85 per cent of the exposure and the quantity of the hedging instrument that the entity actually uses to hedge those 85 per cent. Similarly, if, for example, an entity hedges an exposure using a nominal amount of 40 units of a financial instrument, it shall designate the hedging relationship using a hedge ratio that is the same as that resulting from that quantity of 40 units (ie the entity must not use a hedge ratio based on a higher quantity of units that it might hold in total or a lower quantity of units) and the quantity of the hedged item that it actually hedges with those 40 units.
2. When defining default for the purposes of determining the risk of a default occurring, an entity shall apply a default definition that is consistent with the definition used for internal credit risk management purposes for the relevant financial instrument and consider qualitative indicators (for example, financial covenants) when appropriate. However, there is a rebuttable presumption that default does not occur later than when a financial asset is 90 days past due unless an entity has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The definition of default used for these purposes shall be applied consistently to all financial instruments unless information becomes available that demonstrates that another default definition is more appropriate for a particular financial instrument.
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. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss. If such a mismatch would not be created or enlarged, the entity is required to present the effects of changes in the liability's credit risk in other comprehensive income.

*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

Gerdau S.A. Common Stock is assigned short-term Ba1 & long-term Ba1 estimated rating. Gerdau S.A. Common Stock prediction model is evaluated with Reinforcement Machine Learning (ML) and ElasticNet Regression1,2,3,4 and it is concluded that the GGB stock is predictable in the short/long term. According to price forecasts for (n+4 weeks) period, the dominant strategy among neural network is: Buy

### GGB Gerdau S.A. Common Stock Financial Analysis*

Rating Short-Term Long-Term Senior
Outlook*Ba1Ba1
Income StatementBaa2B2
Balance SheetBaa2Ba3
Leverage RatiosB2C
Cash FlowCBaa2
Rates of Return and ProfitabilityBa1B3

*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: 83 out of 100 with 529 signals.

## References

1. J. Hu and M. P. Wellman. Nash q-learning for general-sum stochastic games. Journal of Machine Learning Research, 4:1039–1069, 2003.
2. Bera, A. M. L. Higgins (1997), "ARCH and bilinearity as competing models for nonlinear dependence," Journal of Business Economic Statistics, 15, 43–50.
3. Bai J, Ng S. 2017. Principal components and regularized estimation of factor models. arXiv:1708.08137 [stat.ME]
4. Çetinkaya, A., Zhang, Y.Z., Hao, Y.M. and Ma, X.Y., Can neural networks predict stock market?(ATVI Stock Forecast). AC Investment Research Journal, 101(3).
5. Wooldridge JM. 2010. Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT Press
6. Çetinkaya, A., Zhang, Y.Z., Hao, Y.M. and Ma, X.Y., MO Stock Price Prediction. AC Investment Research Journal, 101(3).
7. G. Shani, R. Brafman, and D. Heckerman. An MDP-based recommender system. In Proceedings of the Eigh- teenth conference on Uncertainty in artificial intelligence, pages 453–460. Morgan Kaufmann Publishers Inc., 2002
Frequently Asked QuestionsQ: What is the prediction methodology for GGB stock?
A: GGB stock prediction methodology: We evaluate the prediction models Reinforcement Machine Learning (ML) and ElasticNet Regression
Q: Is GGB stock a buy or sell?
A: The dominant strategy among neural network is to Buy GGB Stock.
Q: Is Gerdau S.A. Common Stock stock a good investment?
A: The consensus rating for Gerdau S.A. Common Stock is Buy and is assigned short-term Ba1 & long-term Ba1 estimated rating.
Q: What is the consensus rating of GGB stock?
A: The consensus rating for GGB is Buy.
Q: What is the prediction period for GGB stock?
A: The prediction period for GGB is (n+4 weeks)