Applied statistics for finance and economics Coursework

Applied statistics for finance and economics - Coursework ExampleThe spread of recession globally made share prices go mess dramatically. Changes in pricing is a fundamental aspect in chart analysis. Traders usually watch out for stocks assuming a certain direction or impressions of a possible stock price change (McWhirter, 2008). Momentum becomes a dealers partner if well analyzed and identified. The assumed logic behind price nerve impulse is that price movements are ergodic. A popular argument among many is that share prices change fast to portray sweet information and new information cannot be predicted. This, therefore, means trend analysis does not lead to a better long term performance.The actions of market participants usually determine price momentum. Traders being expedient the way they are, orders tend to be placed once a given direction is determined on stock price. The more sales is experienced the upward(a) or the downward form is increased. This trend proceeds unt il word is out that a new trend now warrants selling or buying the stock. worth direction now becomes chaotic nevertheless not random. Taking the case of random walking argument trends will be seen on a random manner. A good example is tossing a coin. No matter how many you toss it and land on tails the last five times, the probability in coin toss will always remain on 50%. Take another example on roulette wheel ball. The previous spins doesnt necessarily mean that one might land on red or black. The rate sits steadily on 47%. Traders who follow the random walk theory note that the timing of new data and news is not predictable. They also note that that stock prices change very fast with the coming of new information,The constant variation of stock market is the simple definition of volatility. Suppose today the stock market goes up, tomorrow it goes down it goes up again in the following five days, then this is called volatility of stock. The most common cause for this