Modelling A.I. in Economics

CIB Stock: A Risky Investment

Outlook: BanColombia S.A. Common Stock is assigned short-term B1 & long-term Ba2 estimated rating.
AUC Score : What is AUC Score?
Short-Term Revised1 :
Dominant Strategy : BuySpeculative Trend
Time series to forecast n: for Weeks2
Methodology : Deductive Inference (ML)
Hypothesis Testing : Stepwise Regression
Surveillance : Major exchange and OTC

1The accuracy of the model is being monitored on a regular basis.(15-minute period)

2Time series is updated based on short-term trends.

Summary

BanColombia S.A. Common Stock prediction model is evaluated with Deductive Inference (ML) and Stepwise Regression1,2,3,4 and it is concluded that the CIB stock is predictable in the short/long term. Deductive inference is a type of reasoning in which a conclusion is drawn based on a set of premises that are assumed to be true. In machine learning (ML), deductive inference can be used to create models that can make predictions about new data based on a set of known rules. Deductive inference is a supervised learning algorithm, which means that it requires labeled data to train. The labeled data is used to train the model to make predictions about new data. There are many different types of deductive inference algorithms, including decision trees, rule-based systems, and expert systems. Each type of algorithm has its own strengths and weaknesses. According to price forecasts for 6 Month period, the dominant strategy among neural network is: BuySpeculative Trend

Graph 13

Key Points

  1. What is the best way to predict stock prices?
  2. How accurate is machine learning in stock market?
  3. Is it better to buy and sell or hold?

CIB Target Price Prediction Modeling Methodology

We consider BanColombia S.A. Common Stock Decision Process with Deductive Inference (ML) where A is the set of discrete actions of CIB 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(Stepwise Regression)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(Deductive Inference (ML)) X S(n):→ 6 Month e x rx

n:Time series to forecast

p:Price signals of CIB stock

j:Nash equilibria (Neural Network)

k:Dominated move

a:Best response for target price

Deductive Inference (ML)

Deductive inference is a type of reasoning in which a conclusion is drawn based on a set of premises that are assumed to be true. In machine learning (ML), deductive inference can be used to create models that can make predictions about new data based on a set of known rules. Deductive inference is a supervised learning algorithm, which means that it requires labeled data to train. The labeled data is used to train the model to make predictions about new data. There are many different types of deductive inference algorithms, including decision trees, rule-based systems, and expert systems. Each type of algorithm has its own strengths and weaknesses.

Stepwise Regression

Stepwise regression is a method of variable selection in which variables are added or removed from a model one at a time, based on their statistical significance. There are two main types of stepwise regression: forward selection and backward elimination. In forward selection, variables are added to the model one at a time, starting with the variable with the highest F-statistic. The F-statistic is a measure of how much improvement in the model is gained by adding the variable. Variables are added to the model until no variable adds a statistically significant improvement to the model.

 

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?

CIB Stock Forecast (Buy or Sell)

Sample Set: Neural Network
Stock/Index: CIB BanColombia S.A. Common Stock
Time series to forecast: 6 Month

According to price forecasts, the dominant strategy among neural network is: BuySpeculative Trend

Strategic Interaction Table Legend:

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%

Financial Data Adjustments for Deductive Inference (ML) based CIB Stock Prediction Model

  1. For example, an entity may use this condition to designate financial liabilities as at fair value through profit or loss if it meets the principle in paragraph 4.2.2(b) and the entity has financial assets and financial liabilities that share one or more risks and those risks are managed and evaluated on a fair value basis in accordance with a documented policy of asset and liability management. An example could be an entity that has issued 'structured products' containing multiple embedded derivatives and manages the resulting risks on a fair value basis using a mix of derivative and non-derivative financial instruments
  2. For the purpose of this Standard, reasonable and supportable information is that which is reasonably available at the reporting date without undue cost or effort, including information about past events, current conditions and forecasts of future economic conditions. Information that is available for financial reporting purposes is considered to be available without undue cost or effort.
  3. The fact that a derivative is in or out of the money when it is designated as a hedging instrument does not in itself mean that a qualitative assessment is inappropriate. It depends on the circumstances whether hedge ineffectiveness arising from that fact could have a magnitude that a qualitative assessment would not adequately capture.
  4. Expected credit losses reflect an entity's own expectations of credit losses. However, when considering all reasonable and supportable information that is available without undue cost or effort in estimating expected credit losses, an entity should also consider observable market information about the credit risk of the particular financial instrument or similar financial instruments.

*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.

CIB BanColombia S.A. Common Stock Financial Analysis*

Rating Short-Term Long-Term Senior
Outlook*B1Ba2
Income StatementBaa2Baa2
Balance SheetB3B3
Leverage RatiosCaa2Baa2
Cash FlowBaa2C
Rates of Return and ProfitabilityCBaa2

*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?

Conclusions

BanColombia S.A. Common Stock is assigned short-term B1 & long-term Ba2 estimated rating. BanColombia S.A. Common Stock prediction model is evaluated with Deductive Inference (ML) and Stepwise Regression1,2,3,4 and it is concluded that the CIB stock is predictable in the short/long term. According to price forecasts for 6 Month period, the dominant strategy among neural network is: BuySpeculative Trend

Prediction Confidence Score

Trust metric by Neural Network: 85 out of 100 with 880 signals.

References

  1. Akgiray, V. (1989), "Conditional heteroscedasticity in time series of stock returns: Evidence and forecasts," Journal of Business, 62, 55–80.
  2. Bickel P, Klaassen C, Ritov Y, Wellner J. 1998. Efficient and Adaptive Estimation for Semiparametric Models. Berlin: Springer
  3. Athey S, Bayati M, Doudchenko N, Imbens G, Khosravi K. 2017a. Matrix completion methods for causal panel data models. arXiv:1710.10251 [math.ST]
  4. Bai J, Ng S. 2002. Determining the number of factors in approximate factor models. Econometrica 70:191–221
  5. Jorgenson, D.W., Weitzman, M.L., ZXhang, Y.X., Haxo, Y.M. and Mat, Y.X., 2023. Can Neural Networks Predict Stock Market?. AC Investment Research Journal, 220(44).
  6. Athey S, Imbens G. 2016. Recursive partitioning for heterogeneous causal effects. PNAS 113:7353–60
  7. Dimakopoulou M, Zhou Z, Athey S, Imbens G. 2018. Balanced linear contextual bandits. arXiv:1812.06227 [cs.LG]
Frequently Asked QuestionsQ: What is the prediction methodology for CIB stock?
A: CIB stock prediction methodology: We evaluate the prediction models Deductive Inference (ML) and Stepwise Regression
Q: Is CIB stock a buy or sell?
A: The dominant strategy among neural network is to BuySpeculative Trend CIB Stock.
Q: Is BanColombia S.A. Common Stock stock a good investment?
A: The consensus rating for BanColombia S.A. Common Stock is BuySpeculative Trend and is assigned short-term B1 & long-term Ba2 estimated rating.
Q: What is the consensus rating of CIB stock?
A: The consensus rating for CIB is BuySpeculative Trend.
Q: What is the prediction period for CIB stock?
A: The prediction period for CIB is 6 Month

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