Machine Learning Answers: If Seagate Stock Drops 10% A Week, What’s The Chance It’ll Recoup Its Losses In A Month?

Seagate (NASDAQ: STX) stock has seen significant volatility over the last few years. While the demand for data storage is expanding, considering the growth of cloud computing and other technologies such as artificial intelligence and machine learning, the company’s focus on hard-disk drive technology, which is cost-effective but slower and less power-efficient compared to newer solid-state drives has likely weighed on its valuation.

Considering the significant price movements, we began with a simple question that investors could be asking about Seagate’s stock: given a certain drop or rise, say a 10% drop in a week, what should we expect for the next week? Is it very likely that the stock will recover the next week? What about the next month or a quarter? You can test a variety of scenarios on the Trefis Machine Learning Engine to calculate if the Seagate stock dropped, what’s the chance it’ll rise.

For example, if Seagate (STX) Stock drops 10% or more in a week (5 trading days), there is a 27% chance it’ll recover 10% or more, over the next month (about 20 trading days). On the other hand, after a 5% drop over a week (5 trading days), the Trefis machine learning engine says chances of an additional 5% drop over the next month, are about 31%. This is quite significant, and helpful to know for someone trying to recover from a loss. Knowing what to expect for almost any scenario is powerful. It can help you avoid rash moves.

Below, we also discuss a few scenarios and answer common investor questions:

Question 1: Does a rise in Seagate stock become more likely after a drop?

Answer:

The chances of a 5% rise in Seagate stock over the next month:

= 38% after Seagate stock drops by 5% in a week

versus,

= 45% after Seagate stock rises by 5% in a week

Question 2: What about the other way around, does a drop in Seagate stock become more likely after a rise?

Answer:

The chances of a 5% drop in Seagate stock over the next month:

= 31% after Seagate stock drops by 5% in a week

versus,

= 24% after Seagate stock rises by 5% in a week

Question 3: Does patience pay?

Answer:

According to data and Trefis machine learning engine’s calculations, absolutely!

Given a drop of 5% in Seagate stock over a week (5 trading days), while there is a 38% chance the Seagate stock will gain 5% over the subsequent week, there is more than 58% chance this will happen in 6 months, and 68% chance it’ll gain 5% over a year (about 250 trading days).

The table below shows the trend:

Question 4: What about the possibility of a drop after a rise if you wait for a while?

Answer:

After seeing a rise of 5% over 5 days, the chances of a 5% drop in Seagate stock are about 30% over the subsequent quarter of waiting (60 trading days). However, this chance drops slightly to about 27% when the waiting period is a year (250 trading days).

The table below shows the trend:

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