Analysis of Stock Returns

There are two popular methods for analyzing stock. One, technical analysis and two fundamental analysis. Fundamental analysis is done on the historical data to evaluate the decision of the management of the company and calculate credit risk. Technical analysis is a  financial market technique that claims the ability to forecast the future directions of security prices through the study of past market data, primary price and volume.

The actual price and volume are considered the most important factors which gives us an idea of how a certain stock will be in future. So, these two are the only ones taken into account by technical analysis. According to it, the market’s price is related to all the information that is relevant. So this analysis checks internal information rather than external information like news events. Identifiable trends are more focused on by the technicians as investors look for patterned behavior. This causes price action to occur more repeatedly. 

Analysis of Stock Returns

Stock market can also be based on the market trends. It can be understood from the stock charts how well a company has performed in the past years. The earnings of stock influence the whole stock market or part of it. 

Analysis of Stock Returns

Stock market is more of an artificial intelligence and data mining. It is considered inconsistent and unpredictable by most people because it ultimately depends on capital gains and losses. But there are algorithms to detect any patterns in order to predict it. There is a whole study of these patterns which is called stock market analysis. It uses various methods to predict based on different situational algorithms and this can trigger buying and selling orders most of the times automatically. Theses algorithms analyze the past financial data as well as present data so as to make the most accurate predictions of future. For this reason, when it comes to data mining, this is considered as an artificial intelligence. The following paper tries to understand and examine these strategies that are used to make predictions of future stock market. The first thing done is to study the historic stock prices and gather the useful knowledge by calculating the financial indicators. Then the aforementioned artificial intelligence algorithms are used to make prediction of future with the help of tree diagrams. These trees help to find the right stock at right timings for the gain of investors. Several exchanges are part of stock trading including the NYSE, AMEX, NASDAQ, OTCBB and Pink Sheets.