Modelling A.I. in Economics

STNE StoneCo Ltd. Class A Common Shares (Forecast)

Outlook: StoneCo Ltd. Class A Common Shares is assigned short-term Ba1 & long-term Ba1 estimated rating.
Dominant Strategy : Buy
Time series to forecast n: 10 May 2023 for (n+6 month)
Methodology : Supervised Machine Learning (ML)

Abstract

StoneCo Ltd. Class A Common Shares prediction model is evaluated with Supervised Machine Learning (ML) and Paired T-Test1,2,3,4 and it is concluded that the STNE stock is predictable in the short/long term. According to price forecasts for (n+6 month) period, the dominant strategy among neural network is: Buy

Key Points

  1. What is a prediction confidence?
  2. Prediction Modeling
  3. What is the use of Markov decision process?

STNE Target Price Prediction Modeling Methodology

We consider StoneCo Ltd. Class A Common Shares Decision Process with Supervised Machine Learning (ML) where A is the set of discrete actions of STNE 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(Supervised Machine Learning (ML)) X S(n):→ (n+6 month) S = s 1 s 2 s 3

n:Time series to forecast

p:Price signals of STNE 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?

STNE Stock Forecast (Buy or Sell) for (n+6 month)

Sample Set: Neural Network
Stock/Index: STNE StoneCo Ltd. Class A Common Shares
Time series to forecast n: 10 May 2023 for (n+6 month)

According to price forecasts for (n+6 month) 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 StoneCo Ltd. Class A Common Shares

  1. For example, Entity A, whose functional currency is its local currency, has a firm commitment to pay FC150,000 for advertising expenses in nine months' time and a firm commitment to sell finished goods for FC150,000 in 15 months' time. Entity A enters into a foreign currency derivative that settles in nine months' time under which it receives FC100 and pays CU70. Entity A has no other exposures to FC. Entity A does not manage foreign currency risk on a net basis. Hence, Entity A cannot apply hedge accounting for a hedging relationship between the foreign currency derivative and a net position of FC100 (consisting of FC150,000 of the firm purchase commitment—ie advertising services—and FC149,900 (of the FC150,000) of the firm sale commitment) for a nine-month period.
  2. 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).
  3. Expected credit losses shall be discounted to the reporting date, not to the expected default or some other date, using the effective interest rate determined at initial recognition or an approximation thereof. If a financial instrument has a variable interest rate, expected credit losses shall be discounted using the current effective interest rate determined in accordance with paragraph B5.4.5.
  4. An entity applies IAS 21 to financial assets and financial liabilities that are monetary items in accordance with IAS 21 and denominated in a foreign currency. IAS 21 requires any foreign exchange gains and losses on monetary assets and monetary liabilities to be recognised in profit or loss. An exception is a monetary item that is designated as a hedging instrument in a cash flow hedge (see paragraph 6.5.11), a hedge of a net investment (see paragraph 6.5.13) or a fair value hedge of an equity instrument for which an entity has elected to present changes in fair value in other comprehensive income in accordance with paragraph 5.7.5 (see paragraph 6.5.8).

*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

StoneCo Ltd. Class A Common Shares is assigned short-term Ba1 & long-term Ba1 estimated rating. StoneCo Ltd. Class A Common Shares prediction model is evaluated with Supervised Machine Learning (ML) and Paired T-Test1,2,3,4 and it is concluded that the STNE stock is predictable in the short/long term. According to price forecasts for (n+6 month) period, the dominant strategy among neural network is: Buy

STNE StoneCo Ltd. Class A Common Shares Financial Analysis*

Rating Short-Term Long-Term Senior
Outlook*Ba1Ba1
Income StatementB3Caa2
Balance SheetB1Caa2
Leverage RatiosB3B2
Cash FlowB2Baa2
Rates of Return and ProfitabilityBaa2Ba1

*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: 76 out of 100 with 625 signals.

References

  1. K. Tuyls and G. Weiss. Multiagent learning: Basics, challenges, and prospects. AI Magazine, 33(3): 41–52, 2012
  2. V. Borkar. An actor-critic algorithm for constrained Markov decision processes. Systems & Control Letters, 54(3):207–213, 2005.
  3. Mikolov T, Sutskever I, Chen K, Corrado GS, Dean J. 2013b. Distributed representations of words and phrases and their compositionality. In Advances in Neural Information Processing Systems, Vol. 26, ed. Z Ghahramani, M Welling, C Cortes, ND Lawrence, KQ Weinberger, pp. 3111–19. San Diego, CA: Neural Inf. Process. Syst. Found.
  4. Krizhevsky A, Sutskever I, Hinton GE. 2012. Imagenet classification with deep convolutional neural networks. In Advances in Neural Information Processing Systems, Vol. 25, ed. Z Ghahramani, M Welling, C Cortes, ND Lawrence, KQ Weinberger, pp. 1097–105. San Diego, CA: Neural Inf. Process. Syst. Found.
  5. Chernozhukov V, Demirer M, Duflo E, Fernandez-Val I. 2018b. Generic machine learning inference on heteroge- nous treatment effects in randomized experiments. NBER Work. Pap. 24678
  6. Cortes C, Vapnik V. 1995. Support-vector networks. Mach. Learn. 20:273–97
  7. Swaminathan A, Joachims T. 2015. Batch learning from logged bandit feedback through counterfactual risk minimization. J. Mach. Learn. Res. 16:1731–55
Frequently Asked QuestionsQ: What is the prediction methodology for STNE stock?
A: STNE stock prediction methodology: We evaluate the prediction models Supervised Machine Learning (ML) and Paired T-Test
Q: Is STNE stock a buy or sell?
A: The dominant strategy among neural network is to Buy STNE Stock.
Q: Is StoneCo Ltd. Class A Common Shares stock a good investment?
A: The consensus rating for StoneCo Ltd. Class A Common Shares is Buy and is assigned short-term Ba1 & long-term Ba1 estimated rating.
Q: What is the consensus rating of STNE stock?
A: The consensus rating for STNE is Buy.
Q: What is the prediction period for STNE stock?
A: The prediction period for STNE is (n+6 month)

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