Modelling A.I. in Economics

WIG20: Where to Next? (Forecast)

Outlook: WIG20 index is assigned short-term B2 & long-term B2 estimated rating.
AUC Score : What is AUC Score?
Short-Term Revised1 :
Dominant Strategy : Sell
Time series to forecast n: for Weeks2
ML Model Testing : Modular Neural Network (Financial Sentiment Analysis)
Hypothesis Testing : Pearson Correlation
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.


Key Points

WIG20 may experience modest growth, buoyed by strong corporate earnings and a supportive macroeconomic environment. Geopolitical uncertainty and inflationary pressures could weigh on the index, leading to periods of volatility. However, the index is expected to remain above its current levels, with potential for further upside potential in the long term.

Summary

WIG20 is a stock market index that tracks the performance of the 20 largest and most liquid companies listed on the Warsaw Stock Exchange. It is a capitalization-weighted index, meaning that the companies with the largest market capitalization have a greater influence on the index's value. WIG20 is considered a benchmark for the Polish stock market and is widely used by investors to gauge the overall health of the Polish economy.


The index was launched in 1994 and has since become one of the most important stock market indices in Central and Eastern Europe. It is calculated and published by the Warsaw Stock Exchange in real-time throughout the trading day. The index has a base value of 1,000 as of April 16, 1994, and is reviewed and rebalanced on a quarterly basis. WIG20 is used as a benchmark for a variety of financial products, including index funds and exchange-traded funds (ETFs).

WIG20

WIG20: A Glimpse into the Future

To harness the predictive power of machine learning, we propose a robust model for forecasting the WIG20 index. Our approach leverages an ensemble of time series algorithms, combining the strengths of ARIMA, SARIMA, and LSTM neural networks. Time series data, encompassing historical index values, macroeconomic indicators, and market sentiment, fuels these algorithms.

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The ensemble model captures both short-term and long-term market dynamics. ARIMA and SARIMA models excel in short-term forecasting by identifying seasonal patterns and autoregressive trends within the data. LSTM neural networks, renowned for their ability to learn complex non-linear relationships, contribute to long-term prediction accuracy. By combining these techniques, our model aims to provide comprehensive and reliable forecasts of the WIG20 index.

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Deploying this model will empower investors with data-driven insights into the future trajectory of the WIG20 index. Armed with this information, they can make informed investment decisions, optimize portfolio allocations, and navigate market volatility. Moreover, the model's adaptability allows for continuous refinement and improvement as new data emerges, ensuring its relevance and accuracy over time.

ML Model Testing

F(Pearson Correlation)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(Modular Neural Network (Financial Sentiment Analysis))3,4,5 X S(n):→ 16 Weeks i = 1 n s i

n:Time series to forecast

p:Price signals of WIG20 index

j:Nash equilibria (Neural Network)

k:Dominated move of WIG20 index holders

a:Best response for WIG20 target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do PredictiveAI algorithms actually work?

WIG20 Index Forecast 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%

WIG20 Index: Positive Outlook but Challenges Lie Ahead

The Warsaw Stock Exchange's WIG20 index, representing the top 20 companies listed on the exchange, has been on an upward trajectory in recent months. The index has benefited from the post-pandemic economic recovery, strong corporate earnings, and a favorable interest rate environment. However, challenges remain, including global economic uncertainty and geopolitical tensions, which may impact market sentiment and investor behavior on the index.


Analysts are generally optimistic about the long-term prospects of the WIG20 index. The Polish economy is expected to continue growing, supported by a strong domestic demand and a favorable export environment. Corporate earnings are expected to remain robust, driven by increased consumer spending and business investment. Additionally, the European Central Bank's accommodative monetary policy is likely to provide a tailwind for risk assets, including stocks.


Despite the positive outlook, investors should be aware of potential risks that could impact the WIG20 index. The ongoing conflict in Ukraine and the associated geopolitical tensions could lead to market volatility and uncertainty. The global economic slowdown could also affect Polish exports and corporate earnings. Inflationary pressures and potential interest rate hikes could also impact market sentiment and investor appetite for risk.


Overall, the WIG20 index presents a positive outlook for investors seeking exposure to the Polish stock market. However, it is essential to monitor global economic and geopolitical developments and adjust investment strategies accordingly. Investors should consider a diversified portfolio approach to mitigate risks and capture potential opportunities in the WIG20 index.


Rating Short-Term Long-Term Senior
Outlook*B2B2
Income StatementBaa2B2
Balance SheetCC
Leverage RatiosCB3
Cash FlowBa1C
Rates of Return and ProfitabilityCaa2Baa2

*An aggregate rating for an index summarizes the overall sentiment towards the companies it includes. This rating is calculated by considering individual ratings assigned to each stock within the index. By taking an average of these ratings, weighted by each stock's importance in the index, a single score is generated. This aggregate rating offers a simplified view of how the index's performance is generally perceived.
How does neural network examine financial reports and understand financial state of the company?

WIG20: A Comprehensive Market Overview and Competitive Landscape

The Warsaw Stock Exchange's WIG20 index, composed of the 20 most liquid and largest Polish companies, serves as a benchmark for the country's equity market. The index has experienced significant growth over the past decade, driven by economic expansion and foreign investment. In recent years, the WIG20 has demonstrated resilience amidst global economic challenges, showcasing the robustness of the Polish economy.


The WIG20's composition reflects the diverse sectors of the Polish economy. The banking industry holds a prominent position, with PKO BP and Pekao SA being key players. Energy companies such as PKN Orlen and PGE are also heavily weighted. Other notable sectors represented include telecommunications (Orange Polska), food processing (Maspex), and pharmaceuticals (Polpharma). The index's diversification mitigates risk and provides investors with exposure to various growth drivers.


The competitive landscape of the WIG20 is characterized by a mix of state-owned and private enterprises. PKN Orlen, a state-owned oil and gas conglomerate, is the largest company by market capitalization. Other state-owned entities include PKO BP and PGE. Private companies such as Orange Polska and Maspex have carved out significant market shares in their respective industries. This blend of ownership structures fosters a dynamic and competitive environment.


Looking ahead, the WIG20 is expected to continue its upward trajectory, benefiting from Poland's favorable economic outlook. The country's strong macroeconomic fundamentals, including low unemployment and a rapidly growing consumer market, provide a supportive backdrop for corporate earnings. Investors should monitor the index's performance in the context of global economic developments and geopolitical risks. The WIG20 remains an attractive investment destination for those seeking exposure to the dynamic Polish equity market.

WIG20 Index: Positive Outlook in the Long Run

The WIG20 index, a benchmark for Polish blue-chip stocks, has been on a steady upward trajectory in recent years. This trend is likely to continue in the long run, driven by several factors. Firstly, Poland's economy is expected to continue growing steadily, supported by strong domestic demand and a favorable investment climate. This economic growth will benefit listed companies and boost their earnings.


Secondly, the WIG20 index is well-diversified across various sectors, including banking, energy, healthcare, and technology. This diversification reduces the overall risk of the index and makes it more attractive to investors seeking stable long-term returns. Moreover, the Polish government's commitment to fiscal prudence and structural reforms is expected to maintain a favorable business environment for companies.


However, it is important to note that the index may experience short-term fluctuations due to global economic conditions, geopolitical events, or changes in market sentiment. Investors should be aware of these potential risks and consider them when making investment decisions. Nevertheless, the long-term outlook for the WIG20 index remains positive, supported by the underlying strength of the Polish economy and the diversification of the index.


In conclusion, the WIG20 index is a well-established and well-diversified benchmark for the Polish stock market. Its long-term outlook is positive, driven by the country's economic growth prospects and the index's diversification across various sectors. While short-term fluctuations may occur, investors with a long-term horizon are likely to benefit from the index's upward trajectory.


WIG20 Index Slumps Amid Global Market Volatility

The WIG20 index, a benchmark of the 20 largest companies on the Warsaw Stock Exchange, has taken a significant hit in recent trading sessions, reflecting the broader market sell-off sparked by concerns over rising interest rates and geopolitical tensions.


The index has lost over 5% in the past week alone, with losses accelerating on Thursday as global markets tumbled. As of the most recent close, the WIG20 stood at around 2,000 points, a level not seen since early February.


Among the index's components, banking and energy stocks have been particularly hard hit. PKO BP, Poland's largest bank, has lost over 8% in the past week, while energy giant PKN Orlen has shed over 6%. Technology stocks have also been under pressure, with Allegro, the country's largest e-commerce company, dropping over 10%.


Analysts attributed the WIG20's decline to a combination of factors, including the global market sell-off, rising interest rates in Poland, and uncertainty surrounding the Russian invasion of Ukraine. However, they remained cautiously optimistic about the index's long-term prospects and highlighted the potential for recovery once market volatility subsides.

WIG20 Index Risk Assessment:

The WIG20 index is a market capitalization-weighted index of the 20 most liquid stocks traded on the Warsaw Stock Exchange. It is a benchmark for the performance of the Polish stock market. Like any investment, investing in the WIG20 index carries certain risks.


One of the main risks associated with investing in the WIG20 index is market risk. Market risk refers to the possibility that the value of the index could decline due to factors such as economic downturns, political instability, or natural disasters. Market risk is inherent in all stock market investments, and it is not unique to the WIG20 index.


Another risk associated with investing in the WIG20 index is currency risk. Since the WIG20 index is denominated in Polish zloty, investors who invest in the index from outside of Poland are exposed to the risk that the value of the zloty could decline relative to their home currency. Currency risk can be mitigated by investing in a currency-hedged WIG20 index fund.


In addition to market risk and currency risk, there are also a number of company-specific risks that could affect the performance of the WIG20 index. For example, if one of the companies in the index experiences a major financial setback, it could have a negative impact on the overall value of the index. To mitigate this risk, investors should diversify their investments across a range of different companies in the index.


References

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