Modelling A.I. in Economics

Is GWRE Stock Expected to Go Up?

Outlook: Guidewire Software Inc. Common Stock is assigned short-term B1 & long-term Ba3 estimated rating.
AUC Score : What is AUC Score?
Short-Term Revised1 :
Dominant Strategy : Hold
Time series to forecast n: for Weeks2
Methodology : Deductive Inference (ML)
Hypothesis Testing : Lasso 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.


Guidewire Software Inc. Common Stock prediction model is evaluated with Deductive Inference (ML) and Lasso Regression1,2,3,4 and it is concluded that the GWRE 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.5 According to price forecasts for 4 Weeks period, the dominant strategy among neural network is: Hold

Graph 21

Key Points

  1. Fundemental Analysis with Algorithmic Trading
  2. Buy, Sell and Hold Signals
  3. How useful are statistical predictions?

GWRE Stock Price Forecast

We consider Guidewire Software Inc. Common Stock Decision Process with Deductive Inference (ML) where A is the set of discrete actions of GWRE 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


Sample Set: Neural Network
Stock/Index: GWRE Guidewire Software Inc. Common Stock
Time series to forecast: 4 Weeks

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


F(Lasso Regression)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):→ 4 Weeks i = 1 n s i

n:Time series to forecast

p:Price signals of GWRE stock

j:Nash equilibria (Neural Network)

k:Dominated move of GWRE stock holders

a:Best response for GWRE target price


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.5 Lasso regression, also known as L1 regularization, is a type of regression analysis that adds a penalty to the least squares objective function in order to reduce the variance of the estimates and to induce sparsity in the model. This is done by adding a term to the objective function that is proportional to the sum of the absolute values of the coefficients. The penalty term is called the "lasso" penalty, and it is controlled by a parameter called the "lasso constant". Lasso regression can be used to address the problem of multicollinearity in linear regression, as well as the problem of overfitting. Multicollinearity occurs when two or more independent variables are highly correlated. This can cause the standard errors of the coefficients to be large, and it can also cause the coefficients to be unstable. Overfitting occurs when a model is too closely fit to the training data, and as a result, it does not generalize well to new data.6,7

 

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?

GWRE Stock Forecast (Buy or Sell) Strategic Interaction Table

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 GWRE Stock Prediction Model

  1. For loan commitments, an entity considers changes in the risk of a default occurring on the loan to which a loan commitment relates. For financial guarantee contracts, an entity considers the changes in the risk that the specified debtor will default on the contract.
  2. For floating-rate financial assets and floating-rate financial liabilities, periodic re-estimation of cash flows to reflect the movements in the market rates of interest alters the effective interest rate. If a floating-rate financial asset or a floating-rate financial liability is recognised initially at an amount equal to the principal receivable or payable on maturity, re-estimating the future interest payments normally has no significant effect on the carrying amount of the asset or the liability.
  3. For the purpose of applying paragraphs B4.1.11(b) and B4.1.12(b), irrespective of the event or circumstance that causes the early termination of the contract, a party may pay or receive reasonable compensation for that early termination. For example, a party may pay or receive reasonable compensation when it chooses to terminate the contract early (or otherwise causes the early termination to occur).
  4. An entity shall apply the impairment requirements in Section 5.5 retrospectively in accordance with IAS 8 subject to paragraphs 7.2.15 and 7.2.18–7.2.20.

*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.

GWRE Guidewire Software Inc. Common Stock Financial Analysis*

Rating Short-Term Long-Term Senior
Outlook*B1Ba3
Income StatementB2B1
Balance SheetCaa2B3
Leverage RatiosB1Baa2
Cash FlowB2Caa2
Rates of Return and ProfitabilityBa2Ba2

*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?

References

  1. Mnih A, Hinton GE. 2007. Three new graphical models for statistical language modelling. In International Conference on Machine Learning, pp. 641–48. La Jolla, CA: Int. Mach. Learn. Soc.
  2. Van der Vaart AW. 2000. Asymptotic Statistics. Cambridge, UK: Cambridge Univ. Press
  3. Knox SW. 2018. Machine Learning: A Concise Introduction. Hoboken, NJ: Wiley
  4. Gentzkow M, Kelly BT, Taddy M. 2017. Text as data. NBER Work. Pap. 23276
  5. Breusch, T. S. (1978), "Testing for autocorrelation in dynamic linear models," Australian Economic Papers, 17, 334–355.
  6. Cortes C, Vapnik V. 1995. Support-vector networks. Mach. Learn. 20:273–97
  7. Gentzkow M, Kelly BT, Taddy M. 2017. Text as data. NBER Work. Pap. 23276
Frequently Asked QuestionsQ: What is the prediction methodology for GWRE stock?
A: GWRE stock prediction methodology: We evaluate the prediction models Deductive Inference (ML) and Lasso Regression
Q: Is GWRE stock a buy or sell?
A: The dominant strategy among neural network is to Hold GWRE Stock.
Q: Is Guidewire Software Inc. Common Stock stock a good investment?
A: The consensus rating for Guidewire Software Inc. Common Stock is Hold and is assigned short-term B1 & long-term Ba3 estimated rating.
Q: What is the consensus rating of GWRE stock?
A: The consensus rating for GWRE is Hold.
Q: What is the prediction period for GWRE stock?
A: The prediction period for GWRE is 4 Weeks



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