Outlook: VersaBank is assigned short-term Ba1 & long-term Ba1 estimated rating.
Dominant Strategy : Wait until speculative trend diminishes
Time series to forecast n: 30 Apr 2023 for (n+6 month)
Methodology : Ensemble Learning (ML)

## Abstract

VersaBank prediction model is evaluated with Ensemble Learning (ML) and Independent T-Test1,2,3,4 and it is concluded that the VBNK:TSX 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. How can neural networks improve predictions?
2. What are main components of Markov decision process?
3. How do you decide buy or sell a stock?

## VBNK:TSX Target Price Prediction Modeling Methodology

We consider VersaBank Decision Process with Ensemble Learning (ML) where A is the set of discrete actions of VBNK:TSX 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(Independent T-Test)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(Ensemble Learning (ML)) X S(n):→ (n+6 month) $∑ i = 1 n s i$

n:Time series to forecast

p:Price signals of VBNK:TSX 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?

## VBNK:TSX Stock Forecast (Buy or Sell) for (n+6 month)

Sample Set: Neural Network
Stock/Index: VBNK:TSX VersaBank
Time series to forecast n: 30 Apr 2023 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%

## IFRS Reconciliation Adjustments for VersaBank

1. IFRS 16, issued in January 2016, amended paragraphs 2.1, 5.5.15, B4.3.8, B5.5.34 and B5.5.46. An entity shall apply those amendments when it applies IFRS 16.
2. For example, an entity hedges an exposure to Foreign Currency A using a currency derivative that references Foreign Currency B and Foreign Currencies A and B are pegged (ie their exchange rate is maintained within a band or at an exchange rate set by a central bank or other authority). If the exchange rate between Foreign Currency A and Foreign Currency B were changed (ie a new band or rate was set), rebalancing the hedging relationship to reflect the new exchange rate would ensure that the hedging relationship would continue to meet the hedge effectiveness requirement for the hedge ratio in the new circumstances. In contrast, if there was a default on the currency derivative, changing the hedge ratio could not ensure that the hedging relationship would continue to meet that hedge effectiveness requirement. Hence, rebalancing does not facilitate the continuation of a hedging relationship in situations in which the relationship between the hedging instrument and the hedged item changes in a way that cannot be compensated for by adjusting the hedge ratio
3. If an entity has applied paragraph 7.2.6 then at the date of initial application the entity shall recognise any difference between the fair value of the entire hybrid contract at the date of initial application and the sum of the fair values of the components of the hybrid contract at the date of initial application in the opening retained earnings (or other component of equity, as appropriate) of the reporting period that includes the date of initial application.
4. If a put option written by an entity prevents a transferred asset from being derecognised and the entity measures the transferred asset at fair value, the associated liability is measured at the option exercise price plus the time value of the option. The measurement of the asset at fair value is limited to the lower of the fair value and the option exercise price because the entity has no right to increases in the fair value of the transferred asset above the exercise price of the option. This ensures that the net carrying amount of the asset and the associated liability is the fair value of the put option obligation. For example, if the fair value of the underlying asset is CU120, the option exercise price is CU100 and the time value of the option is CU5, the carrying amount of the associated liability is CU105 (CU100 + CU5) and the carrying amount of the asset is CU100 (in this case the option exercise price).

*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

VersaBank is assigned short-term Ba1 & long-term Ba1 estimated rating. VersaBank prediction model is evaluated with Ensemble Learning (ML) and Independent T-Test1,2,3,4 and it is concluded that the VBNK:TSX 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

### VBNK:TSX VersaBank Financial Analysis*

Rating Short-Term Long-Term Senior
Outlook*Ba1Ba1
Income StatementCaa2Baa2
Balance SheetBa3Caa2
Leverage RatiosCBaa2
Cash FlowCaa2B2
Rates of Return and ProfitabilityB1Caa2

*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: 88 out of 100 with 807 signals.

## References

1. Imbens G, Wooldridge J. 2009. Recent developments in the econometrics of program evaluation. J. Econ. Lit. 47:5–86
2. Nie X, Wager S. 2019. Quasi-oracle estimation of heterogeneous treatment effects. arXiv:1712.04912 [stat.ML]
3. Firth JR. 1957. A synopsis of linguistic theory 1930–1955. In Studies in Linguistic Analysis (Special Volume of the Philological Society), ed. JR Firth, pp. 1–32. Oxford, UK: Blackwell
4. C. Szepesvári. Algorithms for Reinforcement Learning. Synthesis Lectures on Artificial Intelligence and Machine Learning. Morgan & Claypool Publishers, 2010
5. Meinshausen N. 2007. Relaxed lasso. Comput. Stat. Data Anal. 52:374–93
6. V. Borkar and R. Jain. Risk-constrained Markov decision processes. IEEE Transaction on Automatic Control, 2014
7. Y. Le Tallec. Robust, risk-sensitive, and data-driven control of Markov decision processes. PhD thesis, Massachusetts Institute of Technology, 2007.
Frequently Asked QuestionsQ: What is the prediction methodology for VBNK:TSX stock?
A: VBNK:TSX stock prediction methodology: We evaluate the prediction models Ensemble Learning (ML) and Independent T-Test
Q: Is VBNK:TSX stock a buy or sell?
A: The dominant strategy among neural network is to Wait until speculative trend diminishes VBNK:TSX Stock.
Q: Is VersaBank stock a good investment?
A: The consensus rating for VersaBank is Wait until speculative trend diminishes and is assigned short-term Ba1 & long-term Ba1 estimated rating.
Q: What is the consensus rating of VBNK:TSX stock?
A: The consensus rating for VBNK:TSX is Wait until speculative trend diminishes.
Q: What is the prediction period for VBNK:TSX stock?
A: The prediction period for VBNK:TSX is (n+6 month)