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# Statistical analysis

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### Statistical analysis

1. 1. Name Roll No.Priyank Darji 07Hardik Nathwani 25Shashank Pai 26Sagar Panchal 27Dharmik Patel 30Kush Shah 38Siddarth Tawde 45
2. 2. STATISTICAL ANAYASISStatistical analysis refers to a collection of methods usedto process large amounts of data and report overall trends.Statistical analysis provides ways to objectively report onhow unusual an event is based on historical data.Statistical analysis to examine the tremendous amount ofdata produced every day by the stock market.
3. 3. MEASUREMENT OF RETURN The rate of return is the total return the investor receives during the holding period ( the period when the security is owned or held by the investor) stated as percentage of the purchase price of the investment at the beginning of the holding period. The general equation for calculating the total rate of return is show below: K = D + S.P- P.P P.P
4. 4. Probabilities are governed by five rules and range from0 to 1A probability can never be larger than 1The sum total of probabilities must be equal to 1If outcome is certain occure, it is assigned a probability of1, and impossible outcome are assigned a probability of 0.The possible outcomes must be mutually exclusive andcollectively exhaustive.The future return are characterized by uncertain.
5. 5. EXCEPTED RATE OF RETURN The return on an investment as estimated by an asset pricing model.Formula :- E(r) = probability * rate of returnFor example:- If a security has a 20% probability of providing a 10% rate of return, a 50% probability of providing a 12% rate of return, and a 25% probability of providing a 14% rate of return.• expected rate of return:- = (.20)(10%) + (.50)(12%) + (.25)(14%) =11.5%.
6. 6. AVERAGE RATE OF RETURN (ARR)DefinitionMethod of investment appraisal which determines return on investment bytotaling the cash flows (over the years for which the money was invested)and dividing that amount by the number of years.Example:Ramesh spent \$800,000 to buy an apartment building. After deducting alloperating expenses, real estate taxes, and insurance, he receives \$65,000in the first year, \$71,000 in the second year, \$69,000 in the third year, and\$70,000 in the fourth year.Solution:-Total net earning = 65,000 + 71,000 + 69,000 + 70,000 = 2,75,000Now divided by 4 275000/4=68750ARR = 68750/800000*100 = 8.59%
7. 7.  Standard deviation is a statistical term that measures the amount of variability or dispersion around an average.Definition of Standard Deviation‘ In finance, standard deviation is applied to the annual rate of return of an investment to measure the investments volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility.
8. 8. Formula :-Example :-
9. 9. FUNDAMENTAL ANALYSIS Meaning:- Fundamental analysis refers to the study of basic fundamental economic indicators which affect the country’s economy. An investor using Fundamental Analysis to make investment decisions will rely heavily on the following sources of information: Company Balance Sheet Income (Profit and Loss) Statement Annual report Company announcements
10. 10. Phase 1 :Analysis of Economy wide factorEconomic fundamental provide the most significantinformation to traders. The impact of economic data tends tobe long term oriented. Economic indicators are reportspublished at a fixed time intervals by government and privateorganizations.Here are some lists of economic report that have mostsignificant impacts on the market:  Gross Domestic Product (GDP)  Gross National Product (GNP)  Inflation report  Interest rate
11. 11. Phase 2 :Analysis of Industry wide factorStudy of industry life cycleThe industry life cycle is made up of the followingstages: 1. Pioneering Phase 2. Growth Phase 3. Mature Growth Phase 4. Stabilization/Maturity Phase 5. Deceleration/Decline Phase
12. 12. CONTD…Study of qualitative and quantitative factor:- 1. Economies of scale 2. Capital Requirements 3. Government Regulation 4. Business Model 5. Management Team
13. 13. Phase 2 :Analysis of Company wide factorThis is usually done by studying the companys financialstatements. From these statements a number of useful ratioscan be calculated.  P/E Ratio  Book Value Per Share  Current Ratio  Debt Ratio
14. 14. TECHNICAL ANALYSIS• Meaning Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume.• The field of technical analysis is based on three assumptions: 1.The market discounts everything. 2. Price moves in trends. 3. History tends to repeat itself.
15. 15. TYPES OF CHARTS1) Bar Charts
16. 16. 2) Line Charts
17. 17. 3) Candlestick Chart
18. 18. BIBLIOGRAPHY www.investopedia.com www.trade-ideas.com www.ikofx.com Risk management book