Beyond Forecast Accuracy: Evaluating the Error–Profit Paradox in AI-Based Copper Price Prediction

Vancsura, László and Tatay, Tibor and Bareith, Tibor (2026) Beyond Forecast Accuracy: Evaluating the Error–Profit Paradox in AI-Based Copper Price Prediction. MACHINE LEARNNG AND KNOWLEDGE EXTRACTION, 8 (7). ISSN 2504-4990

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Abstract

Copper is a strategically important commodity whose price dynamics are increasingly affected by structural changes, geopolitical shocks, and the global energy transition. These conditions create substantial challenges for forecasting models and provide a useful setting for evaluating the practical value of machine learning predictions. This study compares statistical and artificial intelligence-based forecasting models for copper price prediction under different market regimes and structural break conditions. Model performance is assessed using a multi-dimensional evaluation framework that combines statistical accuracy (MAPE), dynamic pattern reproduction (Taylor diagrams and time-lagged cross-correlation analysis), and the economic performance of forecast-driven trading strategies. The results reveal a consistent error–profit paradox: models with the highest statistical forecasting accuracy do not necessarily generate the best trading outcomes. In several cases, models with larger prediction errors achieve superior economic performance because they capture directional market dynamics more effectively. The analyses further show that structural breaks substantially alter model rankings and predictive usefulness, highlighting the importance of regime-aware evaluation. These findings suggest that forecast accuracy alone provides an incomplete assessment of model quality in financial and commodity forecasting applications. The study contributes to machine learning evaluation research by proposing an integrated framework that jointly considers predictive accuracy, temporal dynamics, model robustness, and economic utility, thereby offering a more comprehensive approach to assessing forecasting systems in real-world decision-making environments.

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