Executive Summary
In this forecast evaluation report, we will examine the performance of the forecasts generated by the I Know First AI Algorithm for Apple Inc stock (NASDAQ: AAPL) with time horizons ranging from 3 days to 3 months, which were delivered daily to all clients. Our analysis covers the time period from 1 January 2019 to 21 July 2019. Below, we present our key takeaways:
Highlights For AAPL:
- 96% Hit Ratio for 3-months time period of AAPL predictions allow our clients to be able to invest their money with close to zero risk
- Predictions have consistently been above 65% accuracy in times of volatility
Note that the above results were obtained as a result of evaluation conducted over the specific time period from 1 January 2019 to 21 July 2019 to give a general presentation of the forecasts performance pattern for AAPL stock. The following report provides extensive explanation on our methodology and detailed analysis of the performance metrics that we obtained during the evaluation.
About the I Know First Algorithm
The I Know First self-learning algorithm analyses, models, and predicts the capital market, including stocks, bonds, currencies, commodities and interest rates. The algorithm is based on Artificial Intelligence (AI) and Machine Learning (ML) and incorporates elements of Artificial Neural Networks and Genetic Algorithms.
The system outputs the predicted trend as a number, positive or negative, along with a wave chart that predicts how the waves will overlap with the predicted trend. Consequently, the trader can decide which direction to trade, when to enter the trade, and when to exit the trade. The model is 100% empirical, based only on factual data, thereby avoiding any biases or emotions that may accompany human assumptions. I Know First’s model only involves the human factor is building the mathematical framework and providing the initial set of inputs and outputs to the system. The algorithm produces a forecast with a signal and a predictability indicator. The signal is the number in the middle of the box. The predictability is the number at the bottom of the box. At the top, a specific asset is identified. This format is consistent across all predictions.
Our algorithm provides two independent indicators for asset – signal and predictability.
The signal is the predicted strength and direction of movement of the asset. This is measured from -inf to +inf.
The predictability indicates our confidence in the signal. The predictability is a Pearson correlation coefficient relating past algorithmic performance and actual market movement, measured from -1 to 1.
You can find a detailed description of our heatmap here.
The Hit Ratio Calculation
The hit ratio helps us to identify the accuracy of our algorithm’s predictions. The hit ratio is calculated for each of the forecast horizons as follows:
For instance, a 90% hit ratio for 3 days horizon would imply that the algorithm correctly predicted the AAPL movements 9 out of 10 times on average for 3 days horizon forecasts during 1 January 2019 to 21 July 2019.
Apple Inc.
Apple Inc stock (NASDAQ: AAPL) is one of the most popular stocks to trade and invest within the NASDAQ. It is also a component of the S&P 500. Investors are often looking towards investing in Mega-Cap companies like Apple Inc. as they often have great influence over the rest of the market. Predicting the movement of such stocks will be very profitable in the long run. In 2019, AAPL has seen large fluctuations in price as can be seen in the chart below. It is necessary to identify the correct movement in the stock to profit during times of high volatility.
Evaluating the Forecast by Hit Ratio
Hit ratios are important for any investor, especially ones who are using algorithmic tools such as I Know First’s AI algorithm. An investor is interested in understanding how his manually composed portfolio would compare against one that is composed using the algorithm. If the hit ratio is 50%, it is merely as good as the flip of a fair coin. If one considers Table 1, it is clear that the hit ratios were improving as the investment horizon expanded. Predictions have consistently been above 65% accuracy in times of volatility. The peak hit ratio in Table 1 is 96% for the 3 months period, which is extremely high and is just 4% from perfection.
Conclusion
In this analysis, we demonstrated the good performance of our forecasts for AAPL stock generated by I Know First’s AI Algorithm during the period from 1 January 2019 to 21 July 2019. As shown in the figure 1, the I Know First predictions, produced significantly high hit ratio of 96% on the 3 months time horizon than any other investment time horizon covered by our forecast, allowing our clients to be able to invest their money with close to zero risk during volatile times.
